What is the value of a zero-coupon bond with a par value of $1,000 and a yield to maturity of 6.60%? The bond has 19 years to maturity.

Answers

Answer 1

Answer:

$296.90

Explanation:

For computing the value of the zero coupon bond we need to apply the present value formula i.e to be shown in the attachment below:

Given that,  

Future value = $1,000

Rate of interest = 6.60%

NPER = 19 years

PMT = $0

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after applying the above formula, the value of zero coupon bond is would be $296.90

What Is The Value Of A Zero-coupon Bond With A Par Value Of $1,000 And A Yield To Maturity Of 6.60%?

Related Questions

The risk-free rate is 2.3 percent and the market expected return is 12 percent. What is the expected return of a stock that has a beta of .87?

Answers

Answer:

The expected return = 10.739.

Explanation:

Given risk-free rate of return = 2.3 per cent

Market expected return = 12 percent  

The value of beta = 0.87

Use the below formula to find the expected return.

The expected return = Risk free rate of return + Beta × (Market expected return - risk free rate of return)

The expected return = 2.3 + 0.87 (12 – 2.3)

The expected return = 10.739

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are: Expected Return Standard Deviation Stock fund (S) 15 % 32 % Bond fund (B) 9 % 23 % The correlation between the fund returns is 0.15. What is the Sharpe ratio of the best feasible CAL?

Answers

Answer:

0.296875

Explanation:

Given the following :

Probability distribution of risky funds :

- - - - - - - - - - - - - - stock fund(S) - - bond fund(B)

Expected return - - - 15% - - - - - - - - - - 9%

Std - - - - - - - - - - - - - 32% - - - - - - - - - - 23%

Correlation between funds return = 0.15

Sure rate = 5.5%

To calculate the Sharpe ratio we use the formula :

Sharpe Ratio = (Expected Return of Investment - Risk Free Rate) / Standard Deviation of excess return of investment

For the stock fund :

Expected return = 15%

Risk free rate = market sure rate = 5.5%

Standard deviation = 32%

Sharpe ratio of stock fund :

(15% - 5.5%) / 32%

= 9.5% / 32%

= 0.296875

For Bond fund :

Expected return = 9%

Risk free rate = market sure rate = 5.5%

Standard deviation = 23%

Sharpe ratio of bond fund :

(9% - 5.5%) / 23%

= 3.5% / 23%

= 0.1521739

Therefore the Sharpe ratio of the best feasible CAL is the higher of the two ratios which is 0.296875

Suppose that when your income increases by $300, your consumption expenditures increases by $240.
Your marginal propensity to consume (MPC) is _________ .
If your MPC was the same as the MPC for the economy as a whole, the expenditure multiplier for the economy would be ______________ .
Thus, a $4 million investment project would increase income by $ _________ million in total.

Answers

Answer:

The MPC is 0.8

The multiplier or k is 5

The increase in income would be $20 million.

Explanation:

The marginal propensity to consume (MPC) is the proportion of increased disposable income that consumers spend. It is a metric to quantify the induced consumption and how an increase in consumer spending occurs as a result of increase in income.

MPC is calculated as follows,

MPC = Change in consumer spending / change in income

MPC = 240 / 300

MPC = 0.8 or 80%

To calculate the multiplier, we simply use the following formula,

Multiplier or k = 1 / (1 - MPC)

k = 1 / (1 - 0.8)

k = 5

So, the expenditure multiplier for the economy would be 5.

To calculate the increase in income, we will multiply the investment amount by the expenditure multiplier.

Income increase = 4000000 * 5

Income increase = $20000000 or 20 million

The following labor standards have been established for a particular product: Standard labor-hours per unit of output 9.8 hours Standard labor rate $13.60 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 7,600 hours Actual total labor cost $100,320 Actual output 950 units What is the labor efficiency variance for the month?

Answers

Answer:

the labor efficiency variance for the month is $23,256 Favorable.

Explanation:

Labor efficiency variance = (Aq × SP) - (Sq × Sp)

                                          =  (7,600 × $13.60) - ((950 × 9.8) × $13.60)

                                          =  (7,600 × $13.60) - (9.310 × $13.60)

                                          = $23,256 Favorable

Data pertaining to the current position of Forte Company are as follows:

Cash $412,500
Marketable securities 187,500
Accounts and notes receivable (net) 300,000
Inventories 700,000
Prepaid expenses 50,000
Accounts payable 200,000
Notes payable (short-term) 250,000
Accrued expenses 300,000

Required:
Compute:
a. The working capital.
b. The current ratio.
c. The quick ratio.

Answers

Answer:

Forte Company

Computation of :

a. The working capital = Current Assets minus Current Liabilities

= $1,650,000 - $750,000

= $900,000

b. The current ratio = Current assets/Current liabilities

= $1650,000/$750,000

= 2.2 : 1

c. The quick ratio = (Current asset minus Inventory)/Current liabilities

= ($1,650,000 - 750,000)/$750,000

= $900,000/$750,000

= 1.2 : 1

Explanation:

a) Data and Calculations:

Cash                                                   $412,500

Marketable securities                          187,500

Accounts and notes receivable (net) 300,000

Inventories                                          700,000

Prepaid expenses                                50,000

Total Current Assets                     $1,650,000

Accounts payable                              200,000

Notes payable (short-term)               250,000

Accrued expenses                            300,000

Total Current Liabilities                  $750,000

b) Forte Company's working capital is the difference between the current assets and the current liabilities.  In this case, it is very positive with a huge sum of $900,000.

c ) Forte Company's current ratio is an expression of the relationship between current assets and current liabilities.  It shows how much of current liabilities that current assets can cover.  The ability of the management of Forte Company to settle its current obligations from the current assets is worked out under this ratio.

d) Forte has a quick ratio of more than 1 : 1.  It is similar to the current ratio but with the omission of the Inventory and Prepaid Expenses which are regarded as always taking longer to sell and recover respectively.

Describe various ways that knowledge management systems could help firms with sales and marketing or with manufacturing and production.

Answers

Answer:

Please see explanation below.

Explanation:

Knowledge management system is a system that allows sales people have quick and right information about a company's value proposition without having to wait for feedback from team members or someone else in the company. An advantage of knowledge management system is the ability to train many employees remotely or places where they may be needed.

Various ways ways that knowledge management system could help sales and marketing.

•Getting sales people on the same page. A company's sales team should understand the value propositions of their firm and how such values distinct them from the competitors. Each sales member should be acquitted with the knowledge management system which provides an easily accessible place for the company's value proposition. It also means that the values should readily be known and understood by everyone and are able to apply them according to how situations demands.

• Allowing to refine and deliver a better training process. This explain that knowledge management system can assist in terms of tracking questions frequently asked by sales people , contents mostly assessed by them and activities often carried out by top sales person that bring about the best result. All the information gathered including possible answers and training contents can then be loaded into the knowledge management system to help train new hires.

• Helping to track valuable insights and information. Prospects and customers usually give useful feed back which can assist a sales team and sales representative handles future sales opportunities. It is not enough capturing these information on the knowledge management system, they should be properly organized and accessible for other team members to benefit .

• Making it easier for sales and marketing to help each other. An important part of marketing team's task is to understand the challenges faced by the target audience and the questions prospects commonly ask so as to create relevant contents for them and also upload them on the knowledge management system portal. Such information should be often accessed by the team and then take better advantage of it.

Other areas knowledge management system could help sales and marketing are assistance with sales trend, high level decisions with regards to product orders, price negotiations . etc

Which of the following statements about executing and evaluating the promotion program is most accurate?

a. Although there are five elements in the promotional mix, the only element that reallybenefits from an IMC audit is advertising.
b. Most IMC programs have no difficulty creating a pretest, but posttests are much moredifficult to construct since a number of unknown elements must be measured.
c. To fully benefit from IMC programs, companies must create and maintain a test-resultdatabase that allows comparisons of the relative impact of the promotional tools and theirexecution options in varying situations.
d. The ideal IMC program does not need any evaluation if it is executed according to plan.E. The most effective IMC audits are external. Internal audits tend to skew results to fitexpectations.

Answers

Answer: To fully benefit from IMC programs, companies must create and maintain a test-resultdatabase that allows comparisons of the relative impact of the promotional tools and their execution options in varying situations.

Explanation:

Out of the statements about executing and evaluating the promotion program that were given in the question, the option that is most accurate is that to fully benefit from IMC programs, companies must create and maintain a test-result database that allows comparisons of the relative impact of the promotional tools and their execution options in varying situations.

Therefore, option C is the correct answer.

Which group would advertisers want to target and with what type of advertisement immediately before a holiday, as opposed to during a non-holiday time

Answers

Answer:

in graph it shows that the highest effect is w low content/low motivation/low knowledge

-only tend to be persuaded for a short time and would need the advertisement right before target date

b) group would be persuaded by high content argument but will remain persuaded so do not need to be advertised immediately before the holiday

Explanation:

In the past, Taylor Industries has used a fixed−time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items.
ITEM NUMBER ANNUAL USAGE ITEM NUMBER ANNUAL USAGE
1 $ 1,500 11 $ 13,000
2 12,000 12 600
3 2,200 13 42,000
4 50,000 14 9,900
5 9,600 15 1,200
6 750 16 10,200
7 2,000 17 4,000
8 11,000 18 61,000
9 800 19 3,500
10 15,000 20 2,900
a. What would you recommend Taylor do to cut back its labor cost? (Illustrate using an ABC plan.)
b. Item 15 is critical to continued operations. How would you recommend it beclassified?

Answers

Answer:

a) Taylor Industries can successfully cut back its labor cost in inventory stockrooms by counting only high-value items.  These items are determined by reference to their Annual Usage values.  The items' annual usage values should be used as the activity cost pool for accumulating and allocating labor cost in inventory stockrooms.  Taylor Industries can establish a benchmark or cutoff point so that only the items meeting this benchmark are counted.  For example, the items with annual usage value above $5,000 should be included in the items to be counted.  This strategy will reduce the number of items to be counted and therefore the labor cost.

b) Since item 15 is critical to Taylor Industries' continued operations, it should be classified as a direct materials cost and not an overhead cost.

Explanation:

a) Data and Calculations:

a random sample of 20 of Taylor's items:

ITEM NUMBER   ANNUAL USAGE    ITEM NUMBER    ANNUAL USAGE

1                               $ 1,500                      11                       $ 13,000

2                               12,000                     12                              600

3                                2,200                      13                        42,000

4                              50,000                     14                           9,900

5                                9,600                     15                            1,200

6                                   750                      16                         10,200

7                                2,000                      17                          4,000

8                               11,000                      18                         61,000

9                                  800                       19                         3,500

10                            15,000                      20                        2,900

Average annual usage value = $12,657.50

Project A Project B
Time 0 -10,000 -5,000
Time 1 4,000 3,000
Time 2 3,000 2,000
Time 3 10,000 2,000
If WiseGuy Inc. uses payback period rule to choose projects, which of the projects (Project A or Project B) will rank highest?
a) Project A
b) Project B
c) Project A and B have the same ranking
d) Cannot calculate a payback period without a discount rate

Answers

Answer: b) Project B

Explanation:

Payback period works by checking how long it will take a project to pay back the initial amount invested in it. Project A.

Project A

Payback Period = Year before Payback happens + Amount left till payback/Cash inflow in year of payback

= Time 1 + Time 2

= 4,000 + 3,000

= $7,000

This amount is not enough to cover the investment of $10,000 so the investment will be paid in Time 3 and remains $3,000.

= 2 + 3,000/10,000

= 2.3 Times

Project B

= Time 1 + Time 2

= 3,000 + 2,000

= $5,000

At the end of Time 2, Project B has paid off its initial investment of $5,000. Its Payback period is 2 Times. This is lower than Project A so this project will rank higher.

a project will produce cash inflows of 5400 a year for 3 years with a final cash inflow of 2400 in year 4. The projects initial cost is 13400. what is the net present value if the required rate of return is 14.2 percent?

Answers

Answer:

NPV = $505.9242271 rounded off to $505.92

Explanation:

The NPV or net present value is an important metric that is used for project and investment evaluation. The NPV is the present value of the series of cash flows provided by the project less the initial cost incurred to undertake the project. NPV can be calculated as follows,

NPV = CF1 / (1+r)  +  CF2 / (1+r)^2  +  ....  +  CFn / (1+r)^n - Initial cost

Where,

CF1, CF2 and so on represents the cash flow in year 1 , cash flow in year 2 and so onr represents the required rate of return

NPV = 5400 / (1+0.142)  +  5400 / (1+0.142)^2   +  5400/ (1+0.142)^3  +  

2400 / (1+0.142)^4   -  13400

NPV = $505.9242271 rounded off to $505.92

Brand managers know that increasing promotional budgets eventually result in diminishing returns. The first one million dollars typically results in a 26% increase in awareness, while the second million results in adding another 18% and the third million in a 5% increase. Andrews’s product Ant currently has an awareness level of 78% . While an important product for Andrews, Ant’s promotion budget will be reduced to one million dollars for the upcoming year. Assuming that Ant loses one-third of its awareness each year, what will Ant’s awareness level be next year?

Answers

Answer:

52%

Explanation:

Calculation for Ant’s awareness level be next year

First step

Based on the information given Ant current awareness level is 78% and we are told that Ant loses 1/3 of its awareness each year. Hence we are going to first calculate for Ant Starting awareness using this formula

Starting Awareness=Currently awareness level *(1-1/3 of awareness each year)

Starting Awareness=78%*2/3

Starting Awareness=52%

Second Step

Based on the information given we were told that the first one million dollars results in a 26% increase in awareness.This means that we are going to find the percentage of the awareness after promotion using this formula:

Awareness after promotion = Starting Awareness +increase in awareness

Awareness after promotion=52% + 26%

Awareness after promotion= 78%

The last step is to find the what Ant’s awareness level will be next year using this formula

Awareness level next year = Awareness after promotion * 2/3

Awareness level next year = 78%*2/3

Awareness level next year= 52%

Therefore Ant’s awareness level next year will be 52%

Duerr company makes a $73,000, 90-day, 10% cash loan to Ryan Co. The maturity value of the loan is: (Use 360 days a year.)

Answers

Answer: $74,825

Explanation:

Maturity value is the amount that a borrower will pay to the lender when the loan matures.

Based on the above analysis, the interest will be:

= $73,000 × 10% × 90/360

= $73,000 × 0.1 × 0.25

= $1825

Maturity value will now be the addition of the principal and the interest. This will be:

= $73,000 + $1825

= $74,825

On March 15, a fire destroyed Sheridan Company's entire retail inventory. The inventory on hand as of January 1 totaled $5900000. From January 1 through the time of the fire, the company made purchases of $2032000, incurred freight-in of $242000, and had sales of $4140000. Assuming the rate of gross profit to selling price is 20%, what is the approximate value of the inventory that was destroyed

Answers

Answer:

the approximate value of the inventory that was destroyed is $4,862,000.

Explanation:

Use the Gross Profit percentage to find the value of the inventory that was destroyed.

Sales                                                          $4,140,000

Less Cost of Goods Sold

Opening Inventory          $5,900,000

Add Purchases                $2,032,000

Add Freight In                     $242,000

Available                            $8,174,000

Less Inventory Lost         ($4,862,000)

Cost of Sales                                             (3,312,000)

Gross Profit at 20%                                    $828,000

Conclusion :

The Value of  inventory that was destroyed is $4,862,000.

Hawk Corporation purchased 10,000 Diamond Corporation bonds in 2015 for $55 per bond and classified the investment as securities available for sale. The value of the Diamond investment was $85 per bond on December 31, 2016, and $97 on December 31, 2017. During 2018, Hawk sold all of its Diamond investment at $147 per bond. In its 2018 income statement, Hawk would report:_________.

Answers

Answer:

Gain of $920,000

Explanation:

Calculation for what Hawk would report In its 2018 income statement.

First step is the adjustment of Hawk accumulation of unrealized holding gain and fair value for 205-2017

Unrealized holding gain and fair value Adjustment=($97- 55) × 10,000 shares

Unrealized holding gain and fair value Adjustment=$42×10,000 shares

Unrealized holding gain and fair value Adjustment= $420,000

Second step is to find the additional increase that occurred in 2018

Additional increase=($147-$97)×10,000 shares

Additional increase=50×10,000 shares

Additional increase =$500,000

Last step is to find the total gain realized in the income statement

Total gain realized=$500,000+$420,000

Total gain realized=$920,000

Therefore what Hawk would report In its 2018 income statement will be a gain of $920,000

You purchased a machine for $1.19 million three years ago and have been applying​ straight-line depreciation to zero for a​ seven-year life. Your tax rate is 40%. If you sell the machine today​ (after three years of​ depreciation) for $724,000​, what is your incremental cash flow from selling the​ machine?

Answers

Answer:

The incremental cash flow is $706,400

Explanation:

Calculation of Depreciation for 3 years

Depreciation = Cost / Useful years

= $1,190,000/7

= $170,000

Depreciation up to 3 years = $170,000 * 3

= $510,000

Calculation of Book value

Book value = Cost - Deprciation up to 3 years

= $1,190,000-$510,000

= $680,000

Profit on sale of assets = Sales value - Book value

= $724,000​ - $680,000

= $44,000

Incremental Cash flow = Sales value - (Profit on sales of asset * Tax rate)

= $724,000 - $44,000 * 40%

= $724,000 - $17,600

= $706,400

Therefore, the incremental cash flow is $706,400

Firm M has a margin of 7%, turnover of 2.0, sales of $910,000, and average stockholders' equity of $490,000. Required: Calculate Firm M’s average total assets, net income, return on investment (ROI), and return on equity (ROE

Answers

Answer:

1. Average total asset = $455,000

2. Net income = $63,700

3. Return on investment = 14%

4. Return on equity (ROE) = 13%

Explanation:

These can be calculated as follows:

1. Average total asset

To calculate this, we use the formula for calculating the Asset turnover ratio as follows:

Asset turnover ratio = Sales / Average total asset ……………………………… (1)

Where;

Turnover = asset turnover ratio = 2

Sales = $910,000

Average total asset = ?

Substituting the values into equation (1) and solve for average total asset, we have:

2 = $910,000 / Average total asset

Average total asset = $910,000 / 2

Average total asset = $455,000

2. Net income

To calculate this, we use the formula for calculating net income margin as follows:

Net income margin = Net income / Sales ……………………………………. (2)

Where,

Margin = Net income margin = 7%, or 0.07

Net income = ?

Sales = $910,000

Substituting the values into equation (2) and solve for net income, we have:

7% = Net income / $910,000

Net income = $910,000 * 7%

Net income = $63,700

3. Return on investment

To calculate this, we use the formula for calculating the return on investment as follows:

Return on investment = Net income / Average total assets ……………… (3)

Where;

Net income = $63,700

Average total asset = $455,000

Substituting the values into equation (3), we have:

Return on investment = $63,700 / $455,000

Return on investment = 0.14, or 14%

4. Return on equity (ROE)

To calculate this, we use the formula for calculating the return on equity (ROE) as follows:

Return on equity (ROE) = Net income / Average stockholders' equity…….. (4)

Net income = $63,700

Average stockholders' equity = $490,000

Substituting the values into equation (4), we have:

Return on equity (ROE) = $63,700 / $490,000

Return on equity (ROE) = 0.13, or 13%

A factory costs $400,000. It will produce an inflow after operating costs of $100 000 in year 1. $ 200,000 in year 2, and $ 300,000 in year 3. The opportunity cost of capital is 12%. Calculate NPV.

Answers

Answer:

NPV = $62,258.56

Explanation:

initial outlay year 0 = $400,000

cash inflow year 1 = $100,000

cash inflow year 2 = $200,000

cash inflow year 3 = $300,000

discount rate = 12%

using a financial calculator, NPV = $62,258.56

if you do it by hand:

NPV = -$400,000 + $100,000/1.12 + $200,000/1.12² + $300,000/1.12³ = -$400,000 + $89,285.71 + $159,438.78 + $213,534.07 = $62,258.56

Which of the following is a drawback faced by multinational enterprises (MNEs)pursuing an international strategy?

a. They cannot leverage their home-based core competencies in foreign markets.
b. They are highly affected by exchange rate fluctuations.
c. They have to be highly responsive to local needs and preferences.
d. They cannot reap the benefits of economies of scale due to their highly customized products.

Answers

Answer:

Option b. They are highly affected by exchange rate fluctuations.

Explanation:

international strategy can be defined simply as the means or strategy by  which a firm sells its goods and services outside its domestic market. they helps by  enabling firms to leverage their home-based core competencies in foreign markets.

A multinational enterprise (MNE)  can be said to be a company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries and it can only pursue international strategy if only when it enjoys a large domestic market, strong reputation, and brand name. exchange rate fluctuations affects MNE pursuit of international strategy.

The budgeted conversion costs for a just-in-time cell are $244,720 for 3,800 production hours. Each unit produced by the cell requires 45 minutes of cell process time. During the month, 2,100 units are manufactured in the cell. The estimated materials cost is $50 per unit. What would be the journal entry to record the materials purchased on account to produce 2,200 units

Answers

Answer:  Debit to Raw and In Process Inventory $ 110,000

Credit to Accounts Payable $ 110,000  

Explanation:

Budgeted Conversion Cost  = $ 244,720      

Total Production hours = 3,800 hours      

Material cost per unit = $ 50 per unit

Material purchase for 2,200units (50 x 2,200) = $ 110,000    

Journal to record  purchase of raw material for 2200 units at $50

Accounts title and explanation      Debit                 Credit    

Raw and In process Inventory        $ 110,000      

Accounts Payable                                                             $110,000  

A 20​-year-old woman wants to purchase a ​$100​,000 ​one-year life insurance policy. What should the insurance company charge the woman for the policy if it wants an expected profit of ​$50​?

Answers

Answer:

Hello some parts of the question is missing here is the missing part

Age          probability of female death

20              0.00060

30              0.00070

40              0.00095

50              0.00300

Answer : $110

Explanation:

Given that the woman is 20 years of age and wants to buy one-year life insurance policy the insurance company would have to charge her considering the probability of female death within 20 years of age

expected profit for insurance company = $50

cost of insurance = $100000

For the company to make a profit of $50 we make use of this relation

x * ( 1 - probability of female death at 20 ) - ( cost of insurance - x ) * probability of female death at 20  = 50

= x *( 1 - 0.00060 ) - ( 100000 - x ) * 0.00060 = 50

= x* ( 0.9994 ) - (60 - 0.00060 x ) = 50

= 0.9994 x - 60 + 0.00060 x = 50

hence x = 50 + 60 = $110

The next dividend payment by Hoffman, Inc., will be $2.90 per share. The dividends are anticipated to maintain a growth rate of 4.75 percent forever. If the stock currently sells for $49.40 per share, what is the required return? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answers

Answer:

10.6%

Explanation:

Calculation for the required return

Using this formula

Required return=(Dividend payment/Stock per share)+Anticipated growth rate

Let plug in the formula

Required return =($2.90 per share/$49.40 per share)+0.0475

Required return=0.05870+0.0475

Required return =0.106*100

Required return =10.6%

Therefore the Required return will be 10.6%

Bob: Listen, donuts are made to bring joy into our lives and to wake up our glazed faculties. Just let them be distributed according to unchanging moral principles of justice. The donuts will distribute themselves according to natural principles. We just take what we want and the leftovers will be appreciated by those who enjoy them most. Don't overcomplicate this. Where's the chocolate milk? End Part 2

Answers

Answer:

National law school of thought

Explanation:

The natural law school of thoughts refers to analyze the behavior of humans also it figured out the moral rule occurs from the behaviors.

It is inherent laws that are applied to all societies, communities, etc also it is common for all whether it is mentioned or officially announced

It should be rational and reasonable too

Therefore the given scenario represents the National law school of thought

A stock priced at $61 has three-month calls and puts with an exercise price of $55 available. The calls have a premium of $5.28, and the puts cost $0.56. The risk-free rate is 1.1%. If the put options are mispriced, what is the profit per option assuming no transaction costs?

Answers

Answer:

The Profit per option =  $1.431

Explanation:

Given that:

Current stock price S = $61

Exercise Strike price X = $55

Value of call option C = $5.28

Puts Costs = $0.56

risk-free rate = (1.1% × 3)/12

risk - free rate = 0.275%

If the put options are mispriced, what is the profit per option assuming no transaction costs

Present value of the strike price [tex]X = \dfrac{X}{(1+r)}[/tex]

[tex]X = \dfrac{55}{(1+\dfrac{0.275}{100})}[/tex]

[tex]X = \dfrac{55}{(1+0.00275)}[/tex]

[tex]X = \dfrac{55}{(1.00275)}[/tex]

X = $54.849

The formula that hold for the  put option can be expressed as:

P = Present value of  the strike price X + C - S

P = $(54.849 + 5.28 - 61)

P = $60.129 - $61

P = - $0.871

Thus, the put option = - $0.871

This implies that the Put option is out of cash since it is negative.

Now, The Profit per option = put costs - (- put option)

The Profit per option =  0.56 - ( - 0.871)

The Profit per option =  $1.431

A firm recently reported EBITDA of $3.95 million, depreciation of $1.20 million, and had a tax rate of 40%. The firm's expenditures on fixed assets and net operating working capital totaled $1.2 million. How much was its free cash flow, in millions

Answers

Answer:

Free cash flow=$2.37

Explanation:

Calculation for how much was its free cash flow, in millions

Using this formula

Free cash flow =[ (Operating income * (1- tax rate) + Depreciation- Expenditures on fixed assets and net operating working capital]

Where,

Operating income =$3.95

(1- tax rate) = (1 - .40)

Depreciation=$1.20

Expenditures on fixed assets and net operating working capital=$1.2

Let plug in the formula

Free cash flow = [($3.95 * (1 - .40) + $1.20 - $1.2]

Free cash flow=$3.95*0.60+$1.20-$1.2

Free cash flow=$2.37+$1.20-$1.2

Free cash flow=$3.57-$1.2

Free cash flow=$2.37

Therefore the amount of its free cash flow, in millions will be $2.37

The Herfindahl-Hirschman Index (HHI) is a mathematical approach to understanding market concentration that provides a single concentration indicator. What is the HHI for an industry characterized by the below noted data?Firm 1 has a market share of 40%Firm 2 has a market share of 20%Firm 3 has a market share of 15%Firm 4 has a market share of 15%Firm 5 has a market share of 10%HHI=___

Answers

Answer:

2550

Explanation:

The HHI is calculated by squaring the market share of each firm in the industry.

40² + 20² + 15² + 15² + 10² = 1600 + 400 + 225 + 225 + 100 = 2550

A company is considering expanding their production capabilities with a new machine that costs $38,000 and has a projected lifespan of 8 years . They estimate the increased production will provide a constant $5,000 per year of additional income . Money can earn 1.7% per year, compounded continuously . Should the company buy the machine

Answers

Answer:

the company should  not buy the machine.

Explanation:

Given that:

cost of the new machine = $38000

lifespan = 8 years

constant income = 5,000

Interest = 1.7%

no of days  = 365

The value of earning at the time of buying can be calculated as follows:

[tex]= \dfrac{5000}{(1+ \dfrac{1.7}{100})^8}+ \dfrac{5000}{(1+ \dfrac{1.7}{100})^7}+\dfrac{5000}{(1+ \dfrac{1.7}{100})^6}+...+ \dfrac{5000}{(1+ \dfrac{1.7}{100})^0}[/tex]

[tex]= 5000 \begin {pmatrix} \dfrac{1}{(1.017)^8}+ \dfrac{1}{(1.017)^8}+\dfrac{1}{(1.017)^6}+...+ 1} \end {pmatrix}[/tex]

Sum of a Geometric progression [tex]S=a \dfrac{(r^n -1)}{(r-1)}[/tex]

[tex]S=(\dfrac{1}{1.017})^8 \dfrac{((1.017)^9 -1)}{(1.017-1)}[/tex]

[tex]S= \dfrac{((1.017)^9 -1)}{ (1.017)^8(0.017)}[/tex]

S = 8.4211

The value of earning at the time of buying = (5000 × 8.4211)-$5000

The value of earning at the time of buying = $42105.5 -$5000

The value of earning at the time of buying = $37105.5

The Machine price = $38000

If the value - Machine price > 0, then the company should  buy the machine

= $ 37105.5 - $38000

= -$ 894.5

Since the value is negative which is less than zero, then the company should  not buy the machine.

The company should not buy the machine since it earns a negative NPV of $894.25.

Data and Calculations:

Cost of machine in present value = $38,000

Projected lifespan = 8 years

Additional annual income = $5,000

Compound interest rate = 1.7%

Present value annuity factor for 1.7% for 8 years = 0.13475

Present value of annual income = $37,105.75 ($5,000/0.13475)

Net present value = -$894.25 ($38,000 - $37,105.75)

Learn more: https://brainly.com/question/19131462

Manufacturing overhead—multiple application bases Staley Toy Co. makes toy flutes. Two manufacturing overhead application bases are used; some overhead is applied on the basis of machine hours at a rate of $5.60 per machine hour, and the balance of the overhead is applied at the rate of 240% of direct labor cost.

Required:

a. Calculate the cost per unit of October production of 4,200 toy flutes that required

1. Raw materials costing $490.

2. 21 direct labor hours costing $357.

3. 36 machine hours.

b. At the end of October, 3,870 of these toy flutes had been sold. Calculate the ending inventory value of the toy flutes still in inventory at October, 31.

Answers

Answer:

a. $ 0.45

b. $148.50

Explanation:

Production Cost Schedule for 4,200 toy flutes

Raw materials costing                   $490.00

Direct Labor                                   $357.00

Overheads ($5.60 × 36)                $201.60

Overheads ($357 × 240%)            $856.80

Total Cost                                    $1,905.40

Cost per unit = Total Cost / Total Number of Units produced

                      =  $1,905.40 / 4,200

                      =  $ 0.45

Closing Inventory = Units Left × Cost per unit

                              = (4,200 -  3,870) × $ 0.45

                              =  330 × $ 0.45

                              =  $148.50

The required investment cost of a​ new, large shopping center is ​$49 million. The salvage value of the project is estimated to be ​$20 million​ (the value of the​ land). The​ project's life is 15 years and the annual operating expenses are estimated to be ​$14 million. The MARR for such projects is 15​% per year. What must the minimum annual revenue be to make the shopping center a worthwhile​ venture?

Answers

Answer:

The minimum annual revenue is 22.38 million.

Explanation:

Let the minimum annual revenue = X

Therefore,

The present value of cash inflows = Present value of cash outflows

X (P/A,15%,15) + 20 (P/F,15%,15)= 49*1 + 14(P/A,15%,15)

Now look into the annuity table or compound interest factor table and use that values to solve the equation.

X(5.847) + 20 (0.1229) = 49 + 14 (5.847)

X(5.847) = 130.858

X = 130.858 / 5.847

X = 22.38 millions

The minimum annual revenue = 22.38 million.

Suppose a period of continuous political instability leads to people to believe that the economy will slide into a deep recession. As a result, people become more likely to accept ________ money in exchange for goods and services.
A. Flat
B. Commodity
U.S. Dollars are an example of _____ money.
A. Flat
B. Commodity

Answers

Answer:

The answer is:

1. Commodity

2. Fiat

Explanation:

We have two questions here.

First, the answer is commodity money. Commodity money is the type of money whose value are tied to the commodity it is made up of. This is used as a medium of exchange when the value of money falls totally (during inflation or hyperinflation.) Examples of commodity money can be gold, cocoa,copper etc.

Second question. The answer is fiat money. Fiat money is the currency issued by the national government of a country through The Fed(in US) or Central banks (in most countries).

The fiat money in US is the US dollar, for Nigeria is Nigerian naira etc. It is a legal tender in those countries.

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