Answer: $50.83
Explanation:
Based on the information given in the question, the following can be deduced:
r = required return = 10.6% = 0.106
D0 = Dividend = 3.29
g = growth rate = 4.4% = 0.044
The price per share of the company's stock will be:
= D0(1 + g)/(r - g)
= 3.29(1 + 0.044)/(0.106 - 0.044)
= 3.29(1.044)/(0.062)
= 3.15134/0.062
= $50.83
Imagine that you are the supply chain manager for the Magic Widget company and you need to measure your supply chain performance. The chart shows the financial variables that you will need to perform your task.
Financial Variables
Total Assets (in $ billions) 15.1
Cost of Goods Sold (in $ billions) 14.3
Inventory:
Raw Material Inventory (in $ billions) 0.76
Work-in-progress Inventory (in $ billions) 0.12
Finished Goods Inventory (in $ billions) 0.82
Compute the percentage of assets committed to inventory and inventory turnover.
Answer:
Percentage of assets in inventory = 11.26%
Inventory turnover = 8.41 times
Explanation:
The computation of the percentage of assets committed to inventory and inventory turnover is shown below:-
Total inventory = Raw material + Work in progress + Finished goods inventory
= $0.76 billion + $0.12 billion + $0.82 billion
= $1.7 billion
Percentage of assets in inventory = Total inventory ÷ Total assets
= $1.7 ÷ $15.1
= 11.26%
Inventory turnover = Cost of goods sold ÷ Total inventory
= $14.3 ÷ $1.7
= 8.41 times
A 60-year old retiree is in a very low tax bracket. He has a low risk tolerance and wishes to make an investment that will provide income. Which is the BEST recommendation
Complete Question:
A 60-year old retiree is in a very low tax bracket. He has a low risk tolerance and wishes to make an investment that will provide income. Which is the BEST recommendation?
Group of answer choices.
A. Mid-cap common stock
B. Municipal bond
C. Bank CD
D. Treasure STRIPS
Answer:
C. Bank CD
Explanation:
In this scenario, a 60-year old retiree is in a very low tax bracket. He has a low risk tolerance and wishes to make an investment that will provide income. A Bank certificate of deposit (CD) is the best recommendation.
A bank certificate of deposit (CD) can be defined as a secured form of time-bound deposit and a special low-risk savings account, wherein money (lump-sum) are left with the bank for a specific period of time in exchange for an interest rate premium.
Generally, a certificate of deposit pays a higher interest rate to its holder than the regular savings account because the banks invest the money in a business.
Additionally, the bank certificate of deposit is protected and insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000.
What is the latest actual share count reported in the 2013 Colgate-Palmolive 10-K? Please provide your answer without comma separator or decimal.
Answer:
The latest actual share count reported in the 2013 Colgate-Palmolive 10-K:
1465706360 shares
Explanation:
Colgate-Palmolive actual share count as reported in the 2013 10-K is One Billion, Four Hundred and Sixty-Five Million, Seven Hundred and Six Thousand, Three Hundred and Sixty (1,465,706,360) shares. This figure represents the outstanding shares of the company, which are issued and fully paid, out of the 2 billion authorized shares. The outstanding shares multiplied with the market share price gives the market capitalization of Colgate-Palmolive.
"If Jason receives his quarterly bonus of $3,000 and spends $2,100 on a computer and puts the rest in his savings account, what is Jason’s MPC and MPS?"
Answer: 0.70; 0.30
Explanation:
Marginal propensity to consume(MPC) is the additional spending by an economic agent due to a rise in income while the marginal propensity to save is the additional saving by someone due to rise in income.
Increase in income = $3,000
Increase in spending = $2,100
Increase in savings = $3,000 - $2,100 = $900
MPC = $2,100/$3,000
= 0.70
MPS = $900/$3,000
= 0.30
Members of the board of directors of have received the following operating income data for the year just ended:
Safety Step Income Statement For the Year Ended May 31, 2018,
Product Line
Industrial Household
Systems Systems Total
Net Sales Revenue $310,000 $330,000 640,000
Cost of Goods Sold
Variable 33,000 48,000 81,000
Fixed 230,000 68,000 298,000
Total Cost of Goods Sold 263,000 116,000 379,000
Gross Profit 47,000 214,000 261,000
Selling and Administrative Expenses
Variable 68,000 72,000 140,000
Fixed 43,000 28,000 71,000
Total Selling and Administrative Expenses 111,000 100,000 211,000
Operating Income (Loss) $(64,000) $114,000 $50,000
Members of the board are surprised that the industrial systems product line is losing money. They commission a study to determine whether the company should discontinue the line. Company accountants estimate that dropping industrial systems will decrease the fixed cost of goods sold by $82,000 and decrease fixed selling and administrative expenses by $15,000.
Required:
a. Prepare a differential analysis to show whether Safety Step should drop the industrial systems product line.
b. Prepare contribution margin income statements to show Safety Step's total operating income under the two alternatives: (a) with the industrial systems line and (b) without the line. Compare the difference between the two alternatives' income numbers to your answer to Requirement 1.
c. What have you learned from the comparison in Requirement 2?
Answer:
a) with industrial without industrial differential
systems systems amount
sales revenue 640,000 330,000 (310,000)
variable COGS (81,000) (48,000) 33,000
fixed COGS (298,000) (216,000) 82,000
gross profit 261,000 66,000 (195,000)
variable S&A (140,000) (72,000) 68,000
fixed S&A (71,000) (56,000) 15,000
operating 50,000 (62,000) (112,000)
income
b) contribution margin income statements:
with industrial systems
Sales revenue $640,000
- Variable COGS ($81,000)
- Variable S&A ($140,000)
Contribution margin $419,000
- Fixed COGS ($298,000)
- Fixed S&A ($71,000)
Operating income $50,000
without industrial systems
Sales revenue $330,000
- Variable COGS ($48,000)
- Variable S&A ($72,000)
Contribution margin $210,000
- Fixed COGS ($216,000)
- Fixed S&A ($56,000)
Operating loss ($62,000)
c) sometimes certain product lines help to amortize fixed costs and even though they are not profitable by themselves, without them, the company's operating profits and net income could be negatively affected.
A product selling in France has a price to the channel of EUR 10.00, fixed costs of EUR 33 million, and variable costs of EUR 4.50. How many units does the company have to sell to break even
Answer:
Break-even point in units= 6,000,000
Explanation:
Giving the following information:
Selling price= $10
Unitary variable cost= $4.5
Fixed costs= 33,000,000
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 33,000,000 / (10 - 4.5)
Break-even point in units= 6,000,000
Imagine you want to use conflict in a positive way. You decide to create a sense of competition among your team members. Which of these tactics could create competition?]
Answer:
a. Acknowledge top performers in the company newsletter.
Explanation:
Conflict among group members could be used for improved results by enhancing the dispute in a constructive manner. This can be achieved by recognizing and rewarding the best performers accordingly.
Therefore according to the given situation, for deciding a sense of competition you need to acknowledge the top performance in the newsletter of the company so that the employees gots motivated that results in their coming better job opportunities
Hence, the correct option is a
Take a real business activity example and relate with the concept of commission depreciation and simple and compound interest rate?
Answer & Explanation: Commission: This is a percentage earned on total sales. Using a health insurance company as an example, brokers earn commission on premium received by the company.
Depreciation: This relates to the wear and tear of an asset. The health insurance company fixed assets such as motor vehicle, furniture and equipments will be depreciated and expensed periodically.
Simple and compound interest rates: Simple interest rate is a rate charged directly on the principal amount deposited. If the health insurance company decides to invest in fixed income or call deposits with a bank for a period of 1 year. The bank can put a specific rate that will be paid to the company as an interest earned.
Compound interest rate on the other hand is beneficial to the financier. It is a rate charged on both the principal amount and the interest earned. For instance if the company decides to take a loan with the bank, the bank can charge a compound interest rate.
Ahmed Company purchases all merchandise on credit. It recently budgeted the month-end accounts payable balances and merchandise inventory balances below. Cash payments on accounts payable during each month are expected to be May, $1,400,000; June, $1,550,000; July, $1,400,000; and August, $1,500,000
Accounts Payable Merchandise Inventory
31-May 150,000 260,000
30-Jun 130,000 500,000
31-Jul 300,000 300,000
31-Aug 120,000 330,000
Required:
a. Compute the budgeted amounts of merchandise purchases.
b. Compute the budgeted amounts of cost of goods sold.
Answer:
Ahmed Company
a. Computation of the budgeted merchandise purchases:
May June July August
Cash payments $1,400,000 1,550,000 1,400,000 1,500,000
Ending balance 150,000 130,000 300,000 120,000
Total $1,550,000 $1,680,000 $1,700,000 $1,620,000
less:
Beginning balance 150,000 130,000 300,000
Purchases $1,550,000 $1,530,000 $1,570,000 $1,320,000
b. Computation of the budgeted cost of goods sold:
May June July August
Beginning Inventory 260,000 500,000 300,000
Purchases 1,550,000 1,530,000 1,570,000 1,320,000
Goods available for sale 1,550,000 1,790,000 2,070,000 1,620,000
Ending Inventory 260,000 500,000 300,000 330,000
Cost of goods sold $1,290,000 $1,290,000 $1,770,000 $1,290,000
Explanation:
a) Data and Calculations:
Accounts Payable Merchandise Inventory
31-May 150,000 260,000
30-Jun 130,000 500,000
31-Jul 300,000 300,000
31-Aug 120,000 330,000
b) Ahmed Company's purchases of merchandise can be obtained by reviewing the Accounts Payable beginning and ending balances and the cash payments made during the months. Alternatively, monthly Accounts Payable can be prepared and the differences in the debit and credit side will be the purchases as the missing figure.
c) Once the purchases of merchandise have been computed, to compute the cost of goods sold becomes easier. The cost of goods sold for Ahmed Company is the difference between the cost of goods available for sale and the ending inventories of merchandise.
BangBang Percussion Company tried to implement a flextime system. However, after only a few months, they abandoned the new system. Which of the following is the most likely reason BangBang would drop its flextime plan?
A. The employees resented being required to come to work early or stay late.
B. It caused an increase in traffic congestion.
C. Workers tend to be less productive when they have to work longer hours in a single day.
D. It often made communication among employees more difficult.
Answer: It often made communication among employees more difficult.
Explanation:
Flextime is a way of redesigning the traditional work schedules in such a way that the workers will work at the hours that's convenient for them and flexible rather than working based on normal office schedule or timing.
The most likely reason BangBang would drop its flextime plan is when communication among employees becomes difficult.
National Bank has several departments that occupy both floors of a two-story building. The departmental accounting system has a single account, Building Occupancy Cost, in its ledger. The types and amounts of occupancy costs recorded in this account for the current period follow.
Depreciation—Building $31,500
Interest—Building mortgage 47,250
Taxes—Building and land 14,000
Gas (heating) expense 4,375
Lighting expense 5,250
Maintenance expense 9,625
Total occupancy cost $112,000
The building has 7,000 square feet on each floor. In prior periods, the accounting manager merely divided the $112,000 occupancy cost by 14,000 square feet to find an average cost of $8 per square foot and then charged each department a building occupancy cost equal to this rate times the number of square feet that it occupied. Diane Linder manages a first-floor department that occupies 900 square feet, and Juan Chiro manages a second-floor department that occupies 1,800 square feet of floor space. In discussing the departmental reports, the second-floor manager questions whether using the same rate per square foot for all departments makes sense because the first-floor space is more valuable. This manager also references a recent real estate study of average local rental costs for similar space that shows first-floor space worth $40 per square foot and second-floor space worth $10 per square foot (excluding costs for heating, lighting, and maintenance).
Required
a. Allocate all occupancy costs to the Linder and Chiro departments using the current allocation method.
b. Allocate the depreciation, interest, and taxes occupancy costs to the Linder and Chiro departments in proportion to the relative market values of the floor space. Allocate the heating, lighting, and maintenance costs to the Linder and Chiro departments in proportion to the square feet occupied (ignoring floor space market values). Analysis Component
c. Which allocation method would you prefer if you were a manager of a second-floor department? Explain.
Answer:
National Bank
a. Allocation of Occupancy costs to Linder and Chiro Departments, using the current allocation method:
Linder's Department Chiro's Department
First-floor square feet 900 1,800
Average occupancy cost $8 $8
Total Occupancy costs $7,200 $14,400
b. Allocation of Occupancy costs to Linder and Chiro Departments, using the relative market values of the floor space:
Linder's Department Chiro's Department
First-floor square feet 900 1,800
Relative market value per square foot $40 $10
Total Occupancy costs:
Depreciation, interest & taxes $36,000 $18,000
Heating, lighting, & maintenance
(Rate = $1.375) $1,237.50 $2,475
Total occupancy costs $37,237.50 $20,475
c. As a manager of a second-floor department I would prefer the second method, where only the heating, lighting, and maintenance costs are based on the average cost and the rest of the occupancy costs are based on the relative market values of the floor space. The reason is that it looks more justified given that the two floors do not have the same market value. Assuming that the two floors command the same market value, then the first method is okay.
Explanation:
a) Data and Calculations:
Depreciation—Building $31,500
Interest—Building mortgage 47,250
Taxes—Building and land 14,000 $92,750
Gas (heating) expense 4,375
Lighting expense 5,250
Maintenance expense 9,625 $19,250
Total occupancy cost $112,000
Total square feet = 14,000
Average occupancy cost based on square feet = $8 ($112,000/14,000)
Building = 7,000 square feet on each floor
Diane Linder's first-floor department = 900 square feet
Juan Chiro's second-floor department = 1,800 square feet
Market rental costs (excluding costs for heating, lighting, and maintenance):
First-floor space = $40 per square foot
Second-floor space = $10 per square foot
1. Discuss how core factors, cues to quality, and interpersonal factors of a product influence your buying decisions. Discuss with supporting examples.
Explanation:
Interpersonal product feature play a role in determining one's buying decision. For example, an individual who is open to new experiences may be more likely to try a new technology.
Another example is that of an individual who has a negative view of how he or she looks or dresses, he or she may tend to seek and buy products that could enhance how they feel about themselves.
As regards the quality of a product, it is usually based on the purchase plan period. For example, an individual who notices he needs an item urgently may be less likely to include quality in his buying decision, especially when it's a life-saving item for an emergency. But someone who has the time and has been planning to buy an item for months, will more likely examine quality before he makes a buying decision.
Waterway has a standard of 2 hours of labor per unit, at $12 per hour. In producing 3800 units, Waterway used 7350 hours of labor at a total cost of $89670. Waterway's labor quantity variance is
Answer:
Direct labor time (efficiency) variance= $3,000 favorable
Explanation:
Giving the following information:
Standard= 2 hours of labor per unit, at $12 per hour.
In producing 3800 units, Waterway used 7350 hours of labor.
To calculate the direct labor quantity variance, we need to use the following formula:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Standard quantity= 2*3,800= 7,600 hours
Direct labor time (efficiency) variance= (7,600 - 7,350)*12
Direct labor time (efficiency) variance= $3,000 favorable
While making purchase decisions, which of the following products is most likely to elicit the greatest reference group influence?
A) A car.
B) A medicine.
C) An award-winning novel.
D) A toothbrush.
Answer: a car
Explanation:
While making purchase decisions, the product that is most likely to elicit the greatest reference group influence will be a car.
This because when an individual has a car, other people see the person and use that as a reference group. It should also be noted that a good thatbis considered public good has a strong influence group.
While making purchase decisions, the product that is most likely to elicit the greatest reference group influence is A) A car.
What is a reference group?A reference group is a group that can influence an individual's buying preferences.
The influence wielded by a reference group depends on the level of conformity within the group.
Thus, while making purchase decisions, the product that is most likely to elicit the greatest reference group influence is A) A car.
Learn more about reference groups in consumer behavior at https://brainly.com/question/13362488
At December 31, 2017, Sweet Corporation had a projected benefit obligation of $561,600, plan assets of $331,900, and prior service cost of $120,300 in accumulated other comprehensive income. Determine the pension asset/liability at December 31, 2017. (Enter liability using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Pension asset/liability at December 31, 2017
Answer:
Pension liability at December 31, 2017 is ($229,700)
Explanation:
Projected benefit obligation $561,600
Less: Plan assets $331,900
Pension liability at December 31, 2017 -$229,700
Maurer, Inc., has an odd dividend policy. The company has just paid a dividend of $2 per share and has announced that it will increase the dividend by $6 per share for each of the next five years, and then never pay another dividend. If you require a return of 12 percent on the company’s stock, how much will you pay for a share today
Answer:
The maximum that should be paid for the stock today is $67.22
Explanation:
To calculate the price of the stock today, we will use the discounted cash flow or the DDM approach. The approach bases the value of the stock on the present value of the expected future cash flows from the stock. The cash flows in terms of stock are the dividend payments made by the stock. The formula to calculate the price or present value today under this approach is,
P0 = D1 / (1+r) + D2 / (1+r)^2 + ... + Dn / (1+r)^n
Where,
D1,D2,... are the dividends expected from the stock in year 1, year 2 and so on.r is the required rate of returnP0 = (2+6) / (1+0.12) + (2+6+6) / (1+0.12)^2 + (2+6+6+6) / (1+0.12)^3 +
(2+6+6+6+6) / (1+0.12)^4 + (2+6+6+6+6+6) / (1+0.12)^5
P0 = $67.22
o What types of human resource issues should management be aware of and sensitive to when making this change in distribution methods
Answer:
Management should be aware of and sensitive to the reaction of outstanding employees who relate directly to the former distribution methods.
Explanation:
When the company changes in distribution methods, the employees who relate and gets benefits directly to the former would react negatively. They are afraid of their own dismissal or income reduction. Some may react extremely which results in damages for the company. Hence, the company should work on internal communications to all employees before officially making the change.
The following is a list of costs that were incurred in the production and sale of large commercial airplanes:
a. Salary of chief compliance officer of company
b. Power used by painting equipment
c. Instrument panel installed in the airplane cockpit
d. Annual bonus paid to the chief operating officer of the company
e. Turbo-charged airplane engine
f. Interior trim material used throughout the airplane cabin
g. Cost of normal scrap from production of airplane body
h. Hourly wages of employees that assemble the airplane
i. Salary of the marketing department personnel
j. Cost of paving the headquarters employee parking lot
k. Cost of electrical wiring throughout the airplane
l. Cost of electronic guidance system installed in the airplane cockpit
m. Salary of plant manager
n. Cost of miniature replicas of the airplane used to promote and market the airplane
o. Human resources department costs for the year
p. Metal used for producing the airplane body
q. Annual fee to a celebrity to promote the aircraft
r. Hydraulic pumps used in the airplane’s flight control system
s. Yearly cost of the maintenance contract for robotic equipment
t. Prebuilt leather seats installed in the first-class cabin
u. Depreciation on factory equipment
v. Special advertising campaign in Aviation Worldmagazine
w. Oil to lubricate factory equipment
x. Masks for use by painters in painting the airplane body
y. Decals for cockpit door, the cost of which is immaterial to the cost of the final product
z. Salary of chief financial officer
Required:
a. Classify each cost as either a product cost or a period cost.
b. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a factory overhead cost.
c. Indicate whether each period cost is a selling expense or an administrative expense.
Answer:
Correct Answer:
PRODUCT COST:
The following falls under direct material cost:
b. Power used by painting equipment
c. Instrument panel installed in the airplane cockpit
e. Turbo-charged airplane engine
f. Interior trim material used throughout the airplane cabin
l. Cost of electronic guidance system installed in the airplane cockpit.
p. Metal used for producing the airplane body
r. Hydraulic pumps used in the airplane’s flight control system
The following falls under direct labour cost:
j. Cost of paving the headquarters employee parking lot
t. Pre-built leather seats installed in the first-class cabin
y. Decals for cockpit door, the cost of which is immaterial to the cost of the final product
The following falls under factory overhead cost:
u. Depreciation on factory equipment.
PERIOD COST:
The following falls under selling expenses:
g. Cost of normal scrap from production of airplane body
h. Hourly wages of employees that assemble the airplane
i. Salary of the marketing department personnel
m. Salary of plant manager
n. Cost of miniature replicas of the airplane used to promote and market the airplane
o. Human resources department costs for the year
q. Annual fee to a celebrity to promote the aircraft
w. Oil to lubricate factory equipment
x. Masks for use by painters in painting the airplane body
z. Salary of chief financial officer
The following falls under an administrative expenses:
a. Salary of chief compliance officer of company
d. Annual bonus paid to the chief operating officer of the company
s. Yearly cost of the maintenance contract for robotic equipment
v. Special advertising campaign in Aviation Worldmagazine.
Explanation:
MNM Foods Inc. manufactures jellies that are made out of gelatin in various fruit flavors. However, its sales dipped significantly in the last quarter. Research reveals that a significant amount of health benefits can be associated with the consumption of jellies. MNM Foods incorporates new promotion strategies to project the newly discovered health benefits. This is an example of:
Answer:
Product improvement
Explanation:
Product improvement is the process by which changes in products that attracts new customers or adds benefits for existing customers.
Companies can either add new product features or improve on existing features.
In this instance MNM Foods Inc. jellies sales dipped significantly in the last quarter. To increase sales they incorporated new promotion strategies to project the newly discovered health benefits.
This is a product improvement strategy that highlights health benefits of jellies to consumers.
The Securities and Exchange Commission requires companies listing on the New York Stock Exchange and the Nasdaq Stock Market to have codes of ethics. A code of ethics is
Answer:
A Code of Ethics are a set of guidelines that helps the member in distinguishing right and wrong and always following the guidelines that protects the interest of profession and stakeholders.
Explanation:
Basically these Ethical codes are set of guidelines that helps the entities and professionals to acknowledge what is expected from them and what are their responsibilities. Usually every reputable profession and organizations adopt code of ethics to encourage and enforce ethical practices in decision making process.
Answer:
Answer:
A Code of Ethics are a set of guidelines that helps the member in distinguishing right and wrong and always following the guidelines that protects the interest of profession and stakeholders.
Explanation:
Basically these Ethical codes are set of guidelines that helps the entities and professionals to acknowledge what is expected from them and what are their responsibilities. Usually every reputable profession and organizations adopt code of ethics to encourage and enforce ethical practices in decision making process.
Explanation:
You bought a stock one year ago for $49.52 per share and sold it today for $57.04 per share. It paid a $1.14 per share dividend today. How much of the return came from dividend yield and how much came from capital gain?
Answer:
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Amos Manufacturing has two major departments. Management wants to compare their relative performance. Information related to the two departments is as follows:Division 1:Sales: $200,000Expenses: $150,000Asset investment: $950,000Division 2:Sales: $45,000Expenses: $35,000Asset investment: $200,000Based on ROI, which division is more profitable?a. Division 1b. Both divisions have the same ROI ratioc. Division 2
Answer:
Division A is doing better and his more profitable because it has a higher ROI than Division B
Explanation:
Return on Investment is the proportion of operating assets that an investment center earned as as net operating income.
ROI is measure of the returned earned by a division relative to the amount invested in the assets used to generate the return.
It is calculated as follows
ROI = operating income/operating assets
Division A
Net operating income = Sales - expenses
Net operating income = 200,000 - 150,000 = 50,000
Operating assets = 950,000
ROI = 50,000/950,000× 100 = 5.26 %
Division B
Net operating income = 45,000 - 35,000 = 10,000
Operating assets = 200,000
ROI = 10,000/ 200,000 × 100 = 5 %
Division A is doing better and his more profitable because it has a higher ROI than Division B
NoGrowth Corporation currently pays a dividend of per quarter, and it will continue to pay this dividend forever. What is the price per share of NoGrowth stock if the firm's equity cost of capital is ?
Answer: $18.88
Explanation:
The dividends are being paid quaterly so in other to use those dividends, the cost of capital will have to be converted to a quaterly rate as well.
[tex]( 1 + r )^{4} = 1.124[/tex]
r = [tex]\sqrt[4]{1.124} - 1[/tex]
r = 2.966%
Using the Dividend discount model, the price per share is;
= Next Dividend / ( cost of capital - growth rate)
= 0.56 / 0.02966
= $18.88
Note; there is no growth rate as the company will pay that dividend forever.
Metals and energy currency futures contracts are actively traded on Group of answer choices propane. gold. All of the options are correct. gold and silver. silver.
Answer: All of the options are correct.
Explanation:
Futures refer to a Derivative Instrument contract that mandates a person to buy an asset (underlying asset) at a future date and at a certain price. This enables the buyer of the contract to be certain of an asset's price in future thereby getting rid of various risks.
Metal futures are mostly traded on gold, silver, and copper and energy futures are traded on energy resources like oil and natural usable gas like Propane which is used for most gas related appliances in the household such as cooking gas.
A firm pays a current dividend of $1.00 which is expected to grow at a rate of 5% indefinitely. If current value of the firm’s shares is $35.00, what is the required return based on the constant growth dividend discount model (DDM)?
Answer:
8%
Explanation:
A firm pays a current dividend of $1
The growth rate is 5%
= 5/100
= 0.05
The current value of the firm's share is $35
Therefore, the required return using the constant growth discount dividend model can be calculated as follows
K = 1×(1+0.05)/35 + 0.05
K= 1×1.05/35 + 0.05
= 1×0.03 + 0.05
= 0.03 + 0.05
= 0.08×100
= 8%
Hence the required return is 8%
"At that time, the market price of ABC is $44. If the market rises to $58 and the call is exercised (the put expires out the money), the gain or loss is:"
Answer:
600 loss
Explanation:
The computation of the gain or loss is shown below:
Since on Jan, there is a put option of 45 at $3 and the market rises to $58
So it losses by 13 points i.e
= 45 - 58
= 13
Now the total premium points collected is of 7 i.e
= 4 + 3
= 7
So, the remaining points left is
= 13 - 7
= 6
So for 6 points, the net loss is $600
In October, Vaughn Company reports 21,200 actual direct labor hours, and it incurs $118,830 of manufacturing overhead costs. Standard hours allowed for the work done is 23,300 hours. The predetermined overhead rate is $4.95 per direct labor hour. Compute the total overhead variance.
Answer:
The answer is $3,495F
Explanation:
The formula for computing total overhead variance is:
Actual overhead - overhead applied.
Overhead applied = overhead rate x standard hours allowed for the workdone.
$4.95 x 23,300 hours
=$115,335
Actual overhead is $118,830
Therefore, we have:
$118,830 - $115,335
= $3,495F
The F in the answer means favourable. The actual overhead incurred is greater than the overhead absorbed.
Which of the following stocks is less risky? Stock Average Return Standard Deviation Coefficient of Variation X 10% 40% 4 Y 20% 40% 2
Answer:
Stock X has a CV of 4 while Stock Y has a CV of 2. As stock Y has a lower CV than Stock X, it is less riskier.
Explanation:
The coefficient of variation is a statistical model which is also used to determine the volatility per unit of a factor. In terms of a stock, the coefficient of variation calculates the volatility of its return. It is calculated by dividing the stock's standard deviation, which is a measure of risk, by the stock's mean return or expected return.
CV = SD / r
Where,
CV is coefficient of variationSD is standard deviationr is expected returnThe CV of a stock tells us the risk per unit of return. The higher the CV, the riskier the stock and vice versa.
Stock X has a CV of 4 while Stock Y has a CV of 2. As stock Y has a lower CV than Stock X, it is less riskier.
Central Systems desires a weighted average cost of capital of 12.7 percent. The firm has an aftertax cost of debt of 4.8 percent and a cost of equity of 15.4 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?
a. 0.37
b. 0.44
c. 0.42
d. 0.56
e. 0.34
Answer:
e. 0.34
Explanation:
Let debt be $D
Equity be $E
Total=(D+E)
WACC = Respective cost * Respective weight
12.7 = {(D*4.8)/(D+E)} + {(15.4*E)/(D+E)}
12.7*(D+E)=4.8D+15.4E
12.7D+12.7E=4.8D+15.4E
D=(15.4-12.7)E /(12.7-4.8)
D = 2.7E / 7.9
D = 0.0341772
D = 0.34 E
Hence, debt-equity ratio=debt/equity
=0.34
Comparing payback period and discounted payback period. Nielsen, Inc. is switching from the payback period to the discounted payback period for small-dollar projects. The cutoff period will remain at three years. Given the following four projects' cash flows, LOADING..., and using a discount rate of %, determine which projects it would have accepted under the payback period and which it will now reject under the discounted payback period. Which projects that would have been accepted under payback period method will now be rejected under the discounted payback period method?
Question Completion:
Given the following four projects' cash flows, and using a discount rate of 10%, ...
project 1 project 2 project 3 project 4
Cost $10,000 $15,000 $8,000 $18,000
Cash Flow Year 1 4,000 7,000 3,000 10,000
Cash Flow Year 2 4,000 5,500 3,500 11,000
Cash Flow Year 3 4,000 4,000 4,000 0
Answer:
Nielsen, Inc.Determination of Projects Acceptance under Payback Period and NPV:
Payback Period NPV
Project 1 Accepted Rejected
Project 2 Accepted Rejected
Project 3 Accepted Accepted
Project 4 Accepted Accepted
Explanation:
1. Data and Calculations:
project 1 project 2 project 3 project 4
Cost $10,000 $15,000 $8,000 $18,000
Cash Flow Year 1 4,000 7,000 3,000 10,000
Cash Flow Year 2 4,000 5,500 3,500 11,000
Cash Flow Year 3 4,000 4,000 4,000 0
Total inflows $12,000 $16,500 $10,500 $21,000
Discount rate = 10%
Payback period Year 3 Year 3 Year 3 Year 2
2. Discount factors: Year 1 = 0.909; Year 2 = 0.826; and Year 3 = 0.751
3. PV of Cash Flows:
project 1 project 2 project 3 project 4
Cost $10,000 $15,000 $8,000 $18,000
Cash Flow Year 1 3,636 6,363 2,727 9,090
Cash Flow Year 2 3,304 4,543 2,891 9,086
Cash Flow Year 3 3,004 3,004 3,004 0
Total PV inflow $9,944 $13,910 $8,622 $18,176
4. NPV ($56) ($1,090) $622 $176
5. Nielsen, Inc.'s payback period is the number of years (or length of time) it takes an investment to reach its break-even point (the point where there is no gain or loss). Nielsen's NPV is the difference between total cash inflows and cash outflows over some periods. A positive NPV for Nielsen shows that the projects should be accepted, while a negative NPV points to some underlying problems with the projects, especially with respect to cash inflows and outflows.
