Answer:
2.2% change in the price of this bond if the market yield to maturity rises to 5.7 percent from the current rate of 5.5 percent.
Explanation:
Face Value = $1,000
Coupon payment = 1000 x 4.5% = $45 annually
Number of periods = n = 16 years
Price of bond is the present value of future cash flows, to calculate Price of the bond use following formula
Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]
Yield to maturity = 5.7%
Price of the Bond = $45 x [ ( 1 - ( 1 + 5.7% )^-16 ) / 5.7% ] + [ $1,000 / ( 1 + 5.7% )^16 ]
Price of the Bond = $876.18
Yield to maturity = 5.5%
Price of the Bond = $45 x [ ( 1 - ( 1 + 5.5% )^-16 ) / 5.5% ] + [ $1,000 / ( 1 + 5.5% )^16 ]
Price of the Bond = $895.38
Percentage Change = ( $895.38 - $876.18 ) / $876.18 = 2.2%
2.2% modification in the price of this bond if the market yield to maturity rises to 5.7 percent from the current rate of 5.5 percent.
Calculation of Percentage change
The Face Value is = $1,000
Then the Coupon payment is = 1000 x 4.5% = $45 annually
After that Number of periods = n is = 16 years
When the Price of bond is the present value of future cash flows, Then to calculate Price of the bond use following formula are:
Price of the Bond is = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]
Then Yield to maturity = 5.7%
The Price of the Bond is = $45 x [ ( 1 - ( 1 + 5.7% )^-16 ) / 5.7% ] + [ $1,000 / ( 1 + 5.7% )^16 ]
The Price of the Bond is = $876.18
Then Yield to maturity is = 5.5%
After that Price of the Bond is = $45 x [ ( 1 - ( 1 + 5.5% )^-16 ) / 5.5% ] + [ $1,000 / ( 1 + 5.5% )^16 ]
Then Price of the Bond = $895.38
Therefore, the Percentage Change is = ( $895.38 - $876.18 ) / $876.18 = 2.2%
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You have just received notification that you have won the $2.06 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect), 74 years from now. What is the present value of your windfall if the appropriate discount rate is 10 percent? (Enter your answer in dollars, not millions, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value $
Answer:
$1781.59
Explanation:
The present value is the current value of a future income or stream of money, at a specified interest rate (or discount rate).
The future value is the value of an income at a future date based on a rate of interest or discount rate.
We will use the present value (and future value) formula here to solve this problem. The formula is:
[tex]PV=\frac{FV}{(1+r)^n}[/tex]
Where
PV is the present value
FV is the future value
r is the rate of interest (or discount rate)
n is the time in years
Given in the problem, something that you will win 74 years from now, it will be worth $2.06 million, so this is the future value.
FV = 2,060,000
The rate of interest (discount rate) is 10 percent, which means:
r = 10% = 10/100 = 0.1
The time period in years would be 74 years, because 74 years from now you will get the money, so:
n = 74
Now, we plug these into the equation and get our answer:
[tex]PV=\frac{FV}{(1+r)^n}\\PV=\frac{2060000}{(1+0.1)^{74}}\\PV=\frac{2060000}{1.1^{74}}\\PV=1781.59[/tex]
Hence the present value is $1781.59
Final answer:
The present value of the specified $2.06 million future prize with a 10% discount rate over 74 years is approximately $687.53.
Explanation:
The present value of a future windfall can be determined using the formula for present value (PV), which is the future value (FV) divided by (1 plus the discount rate or interest rate) raised to the power of the number of periods (n). The question asks for the present value of a $2.06 million prize to be received in 74 years with a discount rate of 10%.
Using the formula PV = FV / (1 + r)^n, where FV is $2,060,000, the interest rate r is 10% or 0.10, and the number of periods n is 74, we get:
PV = $2,060,000 / (1 + 0.10)^74
Calculating this, we end up with a present value of:
PV = $2,060,000 / (1.10)^74 = $2,060,000 / 2995.57 ≈ $687.53
Therefore, the present value of the $2.06 million prize to be received in 74 years at a 10% discount rate is approximately $687.53.
On January 1, 2020, Gottlieb Corporation issued $4,000,000 of 10-year, 8% convertible debentures at 102. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be converted into 8 shares of Gottlieb Corporation $100 par value common stock after December 31, 2021. On January 1, 2022, $400,000 of debentures are converted into common stock, which is then selling at $110. An additional $400,000 of debentures are converted on March 31, 2022. The market price of the common stock is then $115. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight-line basis. Make the necessary journal entries for: (a) December 31, 2021. (c) March 31, 2022. (b) January 1, 2022. (d) June 30, 2022
Answer:
(a) December 31, 2021.
Bond Interest Expense 156,000
Premium on Bonds Payable 4,000
($80,000 X 1/20)
Cash ($4,000,000 X 8% X 6/12) 160,000
(b) January 1, 2022
Bonds Payable 400,000
Premium on Bonds Payable 6,400
Common Stock 320,000
[8 X $100 X ($400,000/$1,000)]
Paid-in Capital in Excess of Par 86,400
Total premium
($4,000,000 X .02) $80,000
Premium amortized
($80,000 X 2/10) 16,000
Balance $64,000
Bonds converted
($400,000 ÷ $4,000,000) 10%
Related premium
($64,000 X 10%) 6,400
(c) March 31, 2022
Bond Interest Expense 7,800
Premium on Bonds Payable 200
($6,400 ÷ 8 years) X 3/12
Bond Interest Payable 8,000
($400,000 X 8% X 3/12)
Bonds Payable 400,000
Premium on Bonds Payable 6,200
Common Stock 320,000
Paid-in Capital in Excess of Par 86,200
Premium as of January 1, 2022
for $400,000 of bonds $6,400
$6,400 ÷ 8 years remaining
x 3/12 (200)
Premium as of March 31, 2022
for $400,000 of bonds $6,200
(d) June 30, 2022
Bond Interest Expense 124,800
Premium on Bonds Payable 3,200
Bond Interest Payable 8,000
($400,000 X 8% X 1/4)***
Cash 136,000*
[Premium to be amortized:
($80,000 X 80%) X 1/20 = $3,200, or
$51,200** ÷ 16 (remaining interest and
amortization periods) = $3,200]
***Total to be paid: ($3,200,000 X 8% ÷ 2) + $8,000 = $136,000
***Original premium $80,000
2020 amortization (8,000)
2021 amortization (8,000)
Jan. 1, 2022 write-off (6,400)
Mar. 31, 2022 amortization (200)
Mar. 31, 2022 write-off (6,200)
$51,200
***Assumes interest accrued on March 31. If not, debit Bond Interest
Expense for $132,800.
The accounting process for convertible debentures issued by Gottlieb Corporation involves creating balanced journal entries that reflect the issuance and conversion of these debentures. The entries consider accrued interest, bond premium amortization, and conversion of debentures into stock.
Explanation:The subject of this question is the accounting process for convertible debentures, specifically those issued by Gottlieb Corporation on January 1, 2020. Journal entries are required to reflect the output of these convertible debentures at specified dates. To understand how this type of record is created, we must understand the two major phases involved: the issuance of the convertible debentures and the conversion of the debentures into corporate stock.
Here are the necessary journal entries:
On December 31, 2021, record the accrued interest and bond premium amortization.Interest expense debited (4,000,000 * 4%) = $160,000Payable credited = $160,000Premium on Bonds Payable debited (4,000,000 * 2% / 10 years / 2) = $4,000Interest expense credited = $4,000On January 1, 2022, record the conversion of $400,000 of debentures into stock.Bonds payable debited = $400,000Common Stock credited (400,000 / 1000 * 100) = $320,000Premium on Bonds Payable credited = $8,000Paid-in Capital in Excess of Par credited = $72,000On March 31, 2022, repeat the process for another $400,000 of debentures.On June 30, 2022, record the accrued interest and bond premium amortization again.In each of these steps, the debits and credits must balance, reflecting the fundamental principle of double-entry bookkeeping.
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The following information was available for Paul Company at December 31, 2020: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $968,000; and sales $1,360,000. Paul’s inventory turnover in 2020 wasa21.5 days.b.26.4 days.c.30.2 days.d.33.8 days.
Answer:
Option (c) is correct.
Explanation:
Given that,
Beginning inventory = $90,000;
Ending inventory = $70,000;
Cost of goods sold = $968,000
Sales = $1,360,000
Average inventor:
= (Beginning inventory + Ending inventory) ÷ 2
= ($90,000 + $70,000) ÷ 2
= $160,000 ÷ 2
= $80,000
Inventory turnover is the ratio of cost of goods sold and average inventory.
Paul’s inventory turnover in 2020:
= Cost of goods sold ÷ Average Inventory
= $968,000 ÷ $80,000
= 12.1 times
Days in inventory:
= 365 days ÷ Inventory turnover ratio
= 365 days ÷ 12.1
= 30.16 or 30.2 days
Ballard Company uses the perpetual inventory system. The company purchased $9,700 of merchandise from Andes Company under the terms 3/10, net/30. Ballard paid for the merchandise within 10 days and also paid $420 freight to obtain the goods under terms FOB shipping point. All of the merchandise purchased was sold for $18,400 cash. The amount of gross margin for this merchandise is:a. $8,280. b. $9,700. c. $8,571.d. $8,700.
Answer:
c. $ 8,571
Explanation:
Computation of gross margin
Purchase cost $ 9,700
Less: Discount availed 3 % $ ( 291)
Net purchases $ 9,409
Add: Freight $ 420
Total cost of merchandise $ 9,829
Sales value $ 18,400
Gross margin on merchandise sales $ 8,571
As the name suggests, convertible bonds allow the owner the option to convert the bonds into a fixed number of shares of common stock. Innovative Energy LLC is a start-up company that just raised $100,000 to conduct a third-party feasibility study on its business model. the company agreed to treat the $100,000 investment as debt at 10% interest rate; however, the investor has the right to exchange the debt for common stock during the company's next financing round. Which of the following terms best describes the $100,000 investment?
Convertible bond
Warrant
Answer:
The $100,000 investment is a convertible bond.
Explanation:
A convertible bond is an interest-bearing or non-interest bearing loan that a public limited company can borrow from an investor. The terms of the loan will determine whether the investor has the right, at the end of the loan period, to convert all or part of the loan amount into the company's shares according to a predetermined conversion ratio.
The conversion ratio (how many shares a lender receives for a given amount of loan) may be fixed or agreed upon based on the circumstances of the exchange, such as the financial ratios calculated from the company's financial statements. The exchange may take place at a pre-determined time or in certain circumstances. The convertible bond may be targeted to a specific target group so that the subscription right for the shares cannot be transferred.
The convertible bond combines the interest yield of the loan with the option of either repaying the principal loan or taking advantage of the increase in the value of the share. It is therefore an intermediate form of equity and debt. Convertible bonds are a popular form of financing, for example, in situations where a small growth company is being financed by venture capitalists. The option included in the loan to convert the growth company loan into equity at a later date may be extremely valuable to the investor. For this reason, a growth company does not usually have to pay the same interest on a convertible bond as on another loan.
Whistle Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget: Operating Expenses Variable Operating Costs $.75 per unit sold Fixed Operating Costs $475,000 Other Info: Units produced in 2016 42,000 Units sold in 2016 40,500 Whistle Works sells each whistle for $12. It's been determined that each unit costs $7.25 to manufacture. How much is total budgeted operating expenses for the year ended 2016?
Answer:
Budgeted Operating expense= $505,375
Explanation:
Giving the following information:
Operating Expenses Variable Operating Costs $.75 per unit sold
Fixed Operating Costs $475,000
Other Info: Units sold in 2016 40,500
To determine the budgeted operating expense, we need to use the following formula:
Operating expense= total fixed operating expense + total variable operating expense
Operating expense= 475,000 + 0.75*40,500= $505,375
The total budgeted operating expenses for Whistle Works in 2016 is $505,375.
Explanation:The total budgeted operating expenses for the year ended 2016 can be calculated by multiplying the variable operating costs by the units sold and adding the fixed operating costs.
Variable operating costs per unit sold is $0.75, so for 40,500 units sold, the total variable operating costs would be 40,500 x $0.75 = $30,375.
Fixed operating costs are $475,000.
To calculate the total budgeted operating expenses, we add the variable operating costs and fixed operating costs: $30,375 + $475,000 = $505,375.
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A workbook contains a list of houses and the months that they were sold in Florida. You are interested in determining the average price of sold houses in June in Ft. Lauderdale. What function is best suited for this calculation?
(A) AVERAGEIF(B) AVERAGEIFS (C) SUMIF (D) MAXIFS
Answer:
The correct answer is letter "B": AVERAGEIFS.
Explanation:
In Microsoft Office Excel, AVERAGEIFS is a function that helps to determine the average of cells that follow different criteria. AVERAGEIFS is one of many functions under the "Statistic" category. The criteria for AVERAGEIFS can be words or range of numbers which allows more diverse analysis compared to other average functions.
The language of price controls supposes that, in a competitive market without government regulations, the equilibrium price of hamburgers is $7 each.
Indicate whether each of the statements is an example of a price ceiling or a price floor and whether it is binding or nonbinding.
(a) There are many teenagers who would like to work at fast-food restaurants, but they are not hired due to minimum-wage laws.
(b) The government prohibits fast-food restaurants from selling hamburgers for more than $5 each.
(c) The government has instituted a legal minimum price of $8 each for hamburgers.
Answer:
A. Price floor, binding
B. Price ceiling, binding
C. Price ceiling binding
Explanation:
Price ceiling is when the government or an agency of the government sets the maximum price for a good or service. Price ceiling is binding if if is set below equilibrium price. Example of price ceiling is rent controls.
Price floor is the minimum price a good or service can be sold. Price floor is binding if it is set above equilibrium price.
Example of price floor is minimum wage.
In this question, minimum wage is an example of A binding price floor because it sets the minimum price labour should be paid and this has led to a fall in the demand for Labour.
In (b), the government sets a price ceiling because $5 is the maximum price hamburgers can be sold for. It is binding because $5 is below the equilibrium price.
In (c), the government set a price floor because $8 is the minimum price hamburgers can be sold for. It is binding because $8 is above equilibrium price,$7.
I hope my answer helps you
Which of the following fringe benefits is taxable to the employee receiving the benefit? a. A small discount on toys granted to the salesperson for a toy store b. Incidental use of the company's copier by an office worker c. A subscription to a tax journal provided by the employer to a corporation's tax accountant d. A 15 percent discount on investment real estate granted to the employee of a real estate developer e. All of the above are tax-free
Answer: E. All of the above are tax -free.
Explanation:
Fringe Benefits are the added compensations provided by an employer of labor to serve as motivation for employees. Fringe Benefits can be taxable or not. Tax -
Free fringe benefits are those removed from the employee's income. Some of them are; Achievement Awards, Athletic Facilities, De Minimis Benefits, Employee discounts, No -additional - cost services, Working condition benefit, etc.
In the list of options provided,
1. A small discount on toys granted for a salesperson for a toy store falls under employee discount which is a tax - free.
2. Incidental use of the company's copier by an office worker is a No -
additional - cost service which is equally tax - free.
3. A subscription to a tax journal provided by the employer to a corporation's tax accountant is needed for his job to progress effectively. It is a working condition benefit which is tax - free.
4. A 15% discount on investment real estate granted to the employee of a real estate developer is also an employee discount which is tax - free.
Answer:
E. All of the above are tax free
Explanation:
Fringe benefits are forms of compensation you provide to employees outside of a stated wage or salary. Common examples of fringe benefits include medical and dental insurance, use of a company car, housing allowance, educational assistance, vacation pay, sick pay, meals and employee discounts.
All the fringe benefits listed in the question above are not taxable.
Hence the best answer is E. All of the above are tax free
If the fictitious country of Islandia puts all of its production resources into fish, it can produce 60 units of fish. If it puts all of its production resources into coconuts, it can produce 30 units of coconuts. If the fictitious country of Mountania puts all of its production resources into fish, it can produce 15 units of fish. If it puts all of its production resources into coconuts, it can produce 45 units of coconuts. Assume that both countries have constant cost functions for both products. nstructions: Round your answers to 2 decimal places. a. What is the opportunity cost of producing 1 unit of fish in Islandia? unit(s) of coconuts b. What is the opportunity cost of producing 1 unit of coconuts in Islandia? unit(s) of fisih c. What is the opportunity cost of producing 1 unit of fish in Mountania? unit(s) of coconuts d. What is the opportunity cost of producing 1 unit of coconuts in Mountania? unitis) of fish e. (Click to select)has a comparative advantage in the production of fish. ck to select) has a comparative advantage in the production of coconuts. f. What will be the terms of trade for fish? Betweena andunits) of coconuts . What will be the terms of trade for coconuts? and?
Answer a:
The opportunity cost of producing 1 unit of fish in Islandia:
Given Data: It can produce 60 units of fish or 30 units of coconuts
Opportunity cost of producing 1 unit of fish 30 coconuts/60 fish Opportunity cost of producing 1 unit of fish = 0.5 unit of coconuts.Thus,1 unit of fish has an opportunity cost of 0.5 units of coconuts.
Answer b :
The opportunity cost of producing 1 unit of coconuts:
Given Data: It can produce 60 units of fish or 30 units of coconuts
Opportunity cost = 60 fish/30 coconut Opportunity cost= 2 unit of fish.Thus,1 unit of coconut has an opportunity cost of 2 unit of coconut.
Answer c:
The opportunity cost of producing 1 unit of fish in Mountania:
Given Data:it can produce 15 units of fish or 45 units of coconuts.
Opportunity cost =45 coconuts/15 fishOpportunity cost = 3 units of coconutThus,1 unit of fish has an opportunity cost of 2 unit of fish.
Answer d;
The opportunity cost of producing 1 unit of coconuts in Mountania:
Given Data: it can produce 15 units of fish or 45 units of coconuts.
Opportunity cost =15 fish/45 coconut Opportunity cost= 0.33 unit of fishThus,1 unit of coconut has an opportunity cost of 0.33 unit of coconut.
Answer e:
The comparative advantage in the production of fish whereas the production of coconuts.
Islandia produces 60 units of fish or 30 units of coconuts and Mountania produces 15 units of fish or 45 units of coconuts.Thus,the Islandia has a comparative advantage in fish production because it can produce 45 more fish given same resources
Answer f:
Part 1 :
The terms of trade for fish :
Multiply the Opportunity Cost of Fish in Mountania (3 coconuts) by the Opportunity Cost of Fish in Icelandia (0.5 Coconuts) to get 1.5 units of coconut as a replacement standard. With 1.5 units of coconut per fish, both countries will be happy because they will be more than the benefits that Icelandia would have received and less than the costs that Mountainia would have incurred.
Part 2:
The terms of trade for coconuts:
By multiplying the Opportunity Cost of Islandia's Coconut (2) by the Opportunity Cost of Mountainia's Coconut (0.33 Coconut), you can derive 0.66 units of fish as the basis for the exchange. Both countries will be satisfied with 0.66 units of fish per coconut, which is lower than the cost that Icelandia will bear and higher than the profit that Mountainia will receive.Learn more :
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Philippe wants to make sure of the success of his new doggy day care, PAWS, by employing the steps in the basic planning process. To initiate the process, what kinds of activities should we expect Philippe to be performing?
Answer:
Full Business Considerations
Efficient Facilities
A Cost-Effective Advertisement
He must Define his Services
He must outline his Service Prices
Carry out interviews for New Clients
With all of these steps being adhered to, Philippe's business will indeed be great!
If demand for a good is extremely elastic, raising the price of that good typically has what effect on total revenue? radio_button_unchecked No discernible change radio_button_unchecked Increases radio_button_unchecked Decreases SUBMIT
Answer:
Decreases.
Explanation:
The law of demand states that for an elastic good an increase in price results in a decrease in quantity demanded.
Elasticity of demand is the degree of responsiveness of quantity demanded to changes in price.
When a good is highly elastic that means the elasticity is above 1. For example if elasticity is 2, an increase in price by 1 unit will result in a decrease in quantity supplied by 2 units.
As total revenue is equal to price multiplied by units sold, total revenue will also reduce with price increase of a highly elastic good.
At the beginning of the year, Saratoga Dress Co. had an inventory of $300,000. During the year, the company purchased merchandise costing $850,000. Net sales for the year totaled $1,200,000, and the gross profit rate was 45%. The cost of goods sold and the ending inventory, respectively, were:
Answer:
The cost of goods sold and the ending inventory, respectively, were: $660,000 and $490,000
Explanation:
Saratoga Dress Co. had gross profit rate of 45%
Gross profit rate = (Gross Profit/ Sales)x 100%
Gross Profit = (Gross profit rate x Sales)/100% = (45% x $1,200,000)/100% = $540,000
Cost of Goods Sold = Sales - Gross Profit = $1,200,000 - $540,000 = $660,000
The ending inventory = the beginning inventory + purchasing merchandise - Cost of Goods Sold = $300,000 + $850,000 - $660,000 = $490,000
You are the general manager of a full-service FBO. Your company sells a customer a new aircraft, with a bank financing the purchase via a written security agreement on the aircraft, filed with the FAA Aircraft Registry and the International Registry. Later, the customer has your shop install an expensive upgraded avionics suite including the latest "glass cockpit" multifunction displays (MFD) integrating flight, navigation, engine and sensor data.
Does your shop have the right to require the aircraft owner to pay the bill for this upgrade in full before you return the aircraft? Explain.
If, when your shop has completed the upgrade but before the customer has paid the bill and while the FBO still has possession of the aircraft, the aircraft owner files for bankruptcy, who will be paid first from the proceeds of the bankruptcy sale of the aircraft: the FBO or the bank? Explain.
Instead, in initial discussions over the price of the upgrade, the customer indicated that she wanted to buy the avionics package from the FBO and have your shop install it, but she wanted to pay the price of the equipment and installation in three equal monthly payments, instead of one lump sum. She has been a good customer, and the proposal is acceptable to you. How can you release the aircraft to her upon completion of the work while protecting the FBO’s security interest in the aircraft to assure payment?
After completing the transaction described in 3, above, your shop installs the avionics package and returns the aircraft to its owner. Before paying the bill, she files for bankruptcy. Now who will be paid first from the proceeds of the bankruptcy sale of the aircraft: the FBO or the bank? Explain.
Answer:
Answer explained below
Explanation:
1) Yes, as the initial consideration was only for the aircraft. Since this upgrade is additional work performed by the company, the client should be billed.
2) As the consideration for the aircraft is yet to be paid and FBO is still in possession of the aircraft, the ownership has not passed into the hands of the customer yet. Thus, even though he may file for bankruptcy, it doesn't impact anything.
3) A written agreement should be entered into with the customer and the bank which states that the disbursements from the bank should be made in 3 equal monthly instalments to the FBO, post release of the aircraft to the customer. Any delay in these will be construed as default by the bank with the necessary legal implications involved for claiming the requisite amount by the FBO from the bank.
4) In this case, the ownership of the aircraft has passed to the customer prior to it defaulting. Thus, the bank will be paid first from the proceeds of the bankruptcy sale of the aircraft.
Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. Sellers will pay all of the tax. unchecked Buyers will pay all of the tax. unanswered The price of Humbugs will rise to $60. unanswered The price of Humbugs will rise by less than $10. unanswered The quantity of Humbugs demanded will not change.
Answer:
The correct options are as follows
Buyers will pay all of the tax.
The price of Humbugs will rise to $60.
The quantity of Humbugs demanded will not change.
Explanation:
As the question is not complete, the complete question is found online and is attached herewith.
The options given are as follows
Sellers will pay all of the tax.
Buyers will pay all of the tax.
The price of Humbugs will rise to $60.
The price of Humbugs will rise by less than $10.
The quantity of Humbugs demanded will not change.
Now option 1 is not correct as the buyer has to pay the tax not the seller.
option 2 is correct
option 3 is correct
option 4 is not correct as the initial price is $50 and the new price is to be more than $60 thus the rise is more than $10.
option 5 is correct as the demand of the hamburger will remain the same.
Answer: Buyers will pay all of the tax.
The price of Humbugs will rise to $60.
The quantity of Humbugs demanded will not change.
Explanation:
Hu
A movie theater substantially decreases the price of its soda during the same week that a heavily advertised new movie is being released to theaters. Assuming consumers like to enjoy movies, soda, and popcorn together, how does this impact the equilibrium price and quantity of popcorn?
Final answer:
When a movie theater decreases the price of soda during the release of a heavily advertised movie, it may lead to an increase in the equilibrium price and quantity of popcorn.
Explanation:
When a movie theatre decreases the price of its soda during the same week that a heavily advertised new movie is being released, it impacts the equilibrium price and quantity of popcorn in the following way:
The decrease in the soda price may lead more people to buy the soda, which in turn may increase the demand for popcorn as people like to enjoy movies, soda, and popcorn together.This increase in demand for popcorn may result in an increase in the equilibrium price of popcorn due to a higher demand for it.The increase in demand for popcorn will also lead to an increase in the equilibrium quantity of popcorn as more people want to buy it.Lydia loves playing with animals. She is good at math and has taken several business classes that she enjoyed. Which career would be the best match for Lydia?
Answer:
The correct answer is letter "C": Owner of a pet sitting service.
Explanation:
According to the personality described in the case, Lydia would could be the owner of a petting service because she likes playing with animals, thus she likes spending time with pets but, as she has good mathematical skills and enjoys business classes she could be in charge of managing a group of people who just like her, have fun being around animals.
A firm is noticing that 10% of its freelance contacts are not being completed on time. They suspect this is because there are no consequences for lateness for the freelancers, but it costs the firm money. The firm decides to implement a penalty for lateness, and guidelines for dealing with contract violations. The firm is:(A) increasing opportunism.(B) focusing on values and beliefs rather than laws and regulations.(C) expanding the range of acceptable actions that firms can take.(D) attempting to reduce transaction costs through institutional frameworks.
Answer:(D) attempting to reduce transaction costs through institutional frameworks.
Explanation: Institutional frameworks are a system of formal rules, guidelines and regulations put in place by organizations in order to effectively regulate the activities or actions of individuals within or outside the Organisation.
It can also involve the sets of informal rules which includes customs,norms and traditional actions put in place to enhance or improve the efficiency of Organisation, which can include the reduction of Costs,increase in overall output and revenue etc.
2. You want to form a portfolio of stock A and stock B. Stock A has a beta of .85 and stock B has a beta of 1.6. If you invest $6,000 in stock A and $4,000 in stock B, what is the portfolio beta
Answer:
Given: Investment in Stock A = $6000 and in Stock B = $4000
Particulars weights beta
Stock A 60 percent 0.85
Stock B 40 percent 1.6
The following is the calculation of the portfolio beta
Portfolio Beta = (0.6 multiply with 0.85) + (0.4 multiply with 1.6)
Solving the equation:
= 0.51 + 0.64
Thus, after solving we get, 1.15
Thus, the portfolio beta = 1.15
Based on the portfolio beta being a weighted average of individual betas, the portfolio beta here is 1.15.
As mentioned, the portfolio beta is a weighted average of the betas of the individual stocks.
It is therefore calculated as:
= (Weight of stock A x Beta of stock A) + (Weight of stock B x Beta of stock B)
Solving gives:
= ( 6,000 / (6,000 + 4,000) x 0.85) + (4,000 / (6,000 + 4,000) x 1.6)
= 0.51 + 0.64
= 1.15
In conclusion, the portfolio beta is 1.15.
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A stock has a spot price of $55. Its May options are about to expire. One of its puts is worth $5 and one of its calls is worth $10. The exercise price of the put must be ______________ and the exercise price of the call must be ________________.
Answer:
$60, $45
Explanation:
A buyer values a house at $525,000 and a seller values the same house at $485,000. If sales tax is 8% and is levied on the seller, then what would be the lowest price that the seller would be willing to sell at?
Answer:
$523,800
Explanation:
Given parameters:
Cost price by buyer = $525000
Selling price by seller = $485000
Sales tax = 8%
Unknown:
The lowest selling price by the seller = ?
Solution:
To solve this business problem, we must understand that the price the seller would be will to part with will be his selling price and the percentage of sales tax incurred in the procurement.
This will be the minimum and least profitable estimated amount the seller is willing to sell at.
Lowest selling price = selling price by seller + amount of sales tax incurred
Sales tax amount = selling price x sales tax percentage
= $485000 x [tex]\frac{8}{100}[/tex]
= $38800
Lowest selling price = $485000 + $38800 = $523,800
Given a value of $485,000 for the house and a sales tax rate of 8%, the seller pays $38,800 in sales tax. Adding this to the initial value, the lowest sale price for the seller would be $523,800.
Explanation:In this problem, we are calculating the minimum selling price a seller would accept for a house, given a specific sales tax rate. The seller values the house at $485,000, but the 8% sales tax is deducted from this amount - so we need to determine how much exactly the sales tax is, and add it to the seller price.
The formula to calculate the sales tax is: 'Value of the house' x (sales tax rate / 100). Substituting the given values, the seller needs to pay $485,000 * (8 / 100) = $38,800 as sales tax. Adding this tax amount to the seller's value of the house, the lowest price the seller would be willing to sell at would be $485,000 + $38,800 = $523,800.
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nternational trade generally results in ____ exposure to international political risk and ____ exposure to international economic conditions, when compared to other methods of international business.
International trade generally results in Lower exposure to international political risk and Lower exposure to international economic conditions, when compared to other methods of international business.
Explanation:
The term International trade refers to the exchange of capital, goods, and services across international boundaries /territories.
The international Trade represents a significant share of gross domestic product (GDP) of a country
Below mentioned are few Advantages of International Trade
It helps in increasing the revenues oof a nationSince the international market has a big size so the competition gets DecreasedIn international trade the countries benefit from from currency exchange. .International market serve as a disposal ground for the Disposal of surplus goods.Prof. Finance will have $1,500,000 saved up by retirement at age 65. The retired professor expects to live 25 more years after retiring. How large of an annual annuity withdrawal can Prof. Finance make at the beginning of each year under this scenario from an account paying 6% compounded annually?
Answer:
He can makes an annual annuity withdrawal of $ 110,698
Explanation:
Prof. Finance has a PV of 1,500,000, which is the ammount after his retirement at age 65 so PV= 1,500,000
6% in this case is the rate of interest so r=6%
number of withdrawals = 25
PMT= $110,698
Prof. Finance can make an annual annuity withdrawal of approximately $143,853.77 at the beginning of each year.
Explanation:To find the annual annuity withdrawal that Prof. Finance can make, we will use the formula for the present value of an annuity. The formula is:
PV = PMT * [(1 - (1 + r)^-n) / r]
Where PV is the present value, PMT is the withdrawal amount, r is the interest rate, and n is the number of years. Plugging in the values, we can calculate the withdrawal amount:
PV = $1,500,000, r = 6%, n = 25 years
PMT = $1,500,000 * (0.06 / (1 - (1 + 0.06)^-25))
PMT ≈ $143,853.77
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Metropolitan Water Utility is planning to upgrade its SCADA system for controlling well pumps,booster pumps, and disinfection equipment so that everything can be controlled from one site. Thefirst phase will reduce labor and travel costs by an estimated $31,000 per year. The second phase will reduce costs by an estimated $20,000 per year. If phase I will occur in years 1 through 3 and phase II in years 4 through 8,
what is
(a) the present worth of the savings, and
(b) the equivalent annual worth for years 1 through 8 of the savings? Use an interest rate of 8% per year.
Answer:
net wortht -143,280.85
equivalent annual cost $ 24,932.98
Explanation:
We sovle for the present value of each annuity:
The first three years:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 31,000.00
time 3
rate 0.08
[tex]31000 \times \frac{1-(1+0.08)^{-3} }{0.08} = PV\\[/tex]
PV $79,890.0066
Then the second phase annuity:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 20,000.00
time 5
rate 0.08
[tex]20000 \times \frac{1-(1+0.08)^{-5} }{0.08} = PV\\[/tex]
PV $79,854.2007
NOw, we discount this as it is three years into the future
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity $79,854.2007
time 3.00
rate 0.08000
[tex]\frac{79854.2007415617}{(1 + 0.08)^{3} } = PV[/tex]
PV 63,390.8391
Total net worth:
79,890.0066 - 63,390.8391 = -143,280.85
The EAC will be the annuity which makes the Present work
[tex]PV \div \frac{1-(1+r)^{-time} }{rate} = C\\[/tex]
PV 143,280.85
rate 0.08
time 8
[tex]143280.85 \div \frac{1-(1+0.08)^{-8} }{0.08} = C\\[/tex]
C $ 24,932.983
Provide a real-world organization that is an example of each level of risk tolerance. Include the company name and industry for each. Include an explanation of whether the company is risk-averse, risk-neutral, or risk-seeking.
Final answer:
Companies exhibit varying levels of risk tolerance: Insurance Companies like State Farm are risk-averse, preferring certain outcomes; Finance Companies such as J.P. Morgan demonstrate risk neutrality, focusing on expected values; and Technology Start-Ups like SpaceX are risk-seeking, embracing high-risk opportunities for potential high rewards.
Explanation:
Identifying organizations based on their level of risk tolerance provides clear examples of how companies employ different strategies in the face of uncertainty. Businesses can generally be categorized as risk-averse, risk-neutral, or risk-seeking based on their approach to risk and decision-making.
Risk-Averse: Insurance Companies, such as State Farm in the insurance industry, exhibit risk aversion by preferentially offering guaranteed outcomes over gambles with similar expected values. Their strategy revolves around minimizing risks through diversification and careful risk assessment.Risk-Neutral: Many Finance Companies, for example, J.P. Morgan Chase & Co., operate with a risk-neutral perspective, focusing purely on the expected value of investments and decisions rather than showing a preference for or against risk.Risk-Seeking: Technology Start-Ups, such as SpaceX, often display a risk-seeking behavior, embracing high-risk, high-reward projects and innovations with the potential for substantial market disruption and growth.Each of these companies illustrates a distinct approach to handling risk, influenced by industry standards, market conditions, and corporate philosophy, impacting their operations, strategies, and investment decisions.
Central Industries has three product lines: A, B and C. The following information is available: Product A Product B Product C Sales $100,000 $90,000 $44,000 Variable costs 76,000 48,000 35,000 Contribution margin 24,000 42,000 9,000 Avoidable fixed costs 9,000 18,000 3,000 Unavoidable fixed costs 6,000 9,000 7,700 Operating income(loss) $9,000 $15,000 $(1,700) Central Industries is thinking about dropping Product C because it is reporting a loss. Assume Central Industries drops Product C and does not replace it. What will happen to operating income
Answer:
Operating Income will decrease by $6,000.
Explanation:
The unavoidable Fixed Cost of Product C will continue to incur even if it is dropped. So, Central Industries will still have to Incur $7,700 of Fixed Cost but by dropping Product C, they can save the existing loss of $1,700. This means that:
1,700 - 7,700 = -$6,000.
Thanks!
Answer:
It will decrease by 6,000 which is the operating contribtuion generated for the product before allocation of common fixed cost.
Explanation:
We have to build the segment income statement
[tex]\left[\begin{array}{ccccc}&A&B&C&Total\\$Sales&100000&90000&44000&234000\\$Variable Cost&-76000&-48000&-35000&-159000\\$Contribution&24000&42000&9000&75000\\$Tracable fixed&-9000&-18000&-3000&-30000\\$Operating Income&15000&24000&6000&45000\\$Fixed Cost&&&&-22700\\$Net Income&&&&22300\\\end{array}\right][/tex]
As the Product is generating a positive contribution for 6,000 it would be a financial disadvantage to discontinued. It is making a "loss" because of the common fixed cost allocated to the product not, the product.
First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City Bank pays 8 percent interest compounded annually.
If you made a $65,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 8 years? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Difference in accounts ______
At 6.90 percent interest, how long does it take to double your money? (Round your answer to 2 decimal places. (e.g., 32.16))
Length of time _____ years
At 6.90 percent interest, how long does it take to quadruple it? (Round your answer to 2 decimal places. (e.g., 32.16))
Length of time _______ years
Answer:
Earns $13650 more;
To double: 14.49years at simple interest or 10.39years at compound rate.43.48years at simple interest or 20.78years at compound rate
To quadruple:
Explanation:
Using simple interest calculation:
I=PRT/100
I=Interest
P=Principal
R=Interest Rate
T=Time
Therefore I=65000*0.08*8
I=41600
Using compound interest calculation;
A=P(1+R)^T
A=Amount
A=65000(1+0.08)^8
A=65000*1.85
A=120250
I=120250-65000
I=55250
The compound interest rate earns more by (55250-41600) =$13,650
To double the interest using simple interest calculation;
65000=65000*0.069*T
T=65000/4485
T=14.49years
To double the interest using compound rate calculation:
130000=65000(1+0.069)^T
(1+0.069)^T=130000/65000
1.069^T=2
T=In(2)/In(0.069)
T=10.39years
To quadruple your money using simple rate calculation:
195000=65000*0.069*T
T=195000/4485
T=43.48Years
To quadruple your money using compound rate calculation;
260000=65000(1+0.069)^T
1.069^T=4
T=In(4)/In(1.069)
T=20.78years
Final answer:
After 8 years, the difference in earnings between the banks is $13,708.50, with Second City Bank yielding more due to compound interest. It takes approximately 10.43 years to double the money and about 20.87 years to quadruple it at a 6.90% interest rate.
Explanation:
The difference in the amount earned from First City Bank and Second City Bank after 8 years can be calculated as follows:
For First City Bank with simple interest at 8%: $65,000 \times (1 + (0.08 \times 8)) = $65,000 \times (1 + 0.64) = $65,000 \times 1.64 = $106,600.For Second City Bank with interest compounded annually at 8%: $65,000 \times (1 + 0.08)\^8 = $65,000 \times 1.08\^8 = $65,000 \times 1.8509 = $120,308.50.The difference is $120,308.50 - $106,600 = $13,708.50.
To calculate the length of time to double your money with an interest rate of 6.90%, you can use the Rule of 72 by dividing 72 by the interest rate: 72 / 6.90 = approximately 10.43 years.
To determine the time to quadruple your money, you need to double the time it takes to double the money since quadrupling is two doublings. This means it will take approximately 20.87 years.
"Your sister just deposited $11,500 into an investment account. She believes that she will earn an annual return of 10 percent for the next 7 years. You believe that you will only be able to earn an annual return of 9.2 percent over the same period. How much more must you deposit today in order to have the same amount as your sister in 7 years?"
Answer:
I must deposit $12,103 today in order to have the same amount as your sister in 7 years.
Explanation:
Future value is the sum of principal amount and compounded interest amount invested on a specific rate for a specific period of time.
Use following formula to calculate the future value of invested amount
FV = PV x ( 1+ r )^n
Invested by my sister
FV = $11,500 x ( 1 + 10% )^7
Invested by me
FV = PV x ( 1 + 9.2% )^7
According to given condition
FV of my investment = FV of my sister's investment
PV x ( 1 + 9.2% )^7 = $11,500 x ( 1 + 10% )^7
PV x ( 1.092 )^7 = $11,500 x ( 1.10 )^7
PV x 1.85165 = $11,500 x 1.9487
PV x 1.85165 = $22410.05
PV = $22410.05 / 1.85165
PV = $12,102.75 = $12,103
Two years ago, you created GoForLess, a new app that shows people the cheapest way to travel by bus, train, or air between two cities. Turns out that your app was a big success, and now you’ve made enough money to hire some additional employees. You’re trying to figure out what your new employees should do. What kinds of jobs should they have? How should they work together? How should they work with you? How can you give your employees enough freedom to be innovative, while maintaining enough control over their work to be sure that GoForLess will stay true to its overall goals?
You start by thinking about specialization. To what extent do your new employees need to have broad job responsibilities versus narrow job responsibilities? You know that to build a good app, you need to have people who have infrastructure automation, community building, programming, copywriting, data visualization, user experience, business, innovation, analysis, design, testing, and domain knowledge skills.
Look at the following two organizational designs and indicate which one you would choose.
A. I want my employees to have broad job responsibilities. I’ll hire a small group of employees next year that have multiple skills, and ask them to work on anything that will help the company meet its goals.
B. I want my employees to have very narrow job responsibilities. I’ll hire more people with specific experience next year, and each person will form the basis for future departments in my company.
Five years go by, and now you’ve hired 30 additional employees. Recently, you’ve noticed that some of your employees seem less happy than they were earlier. You hear complaints that people are bored and tired of doing the same thing all the time.
Which approach would you choose to solve problems most commonly associated with highly specialized work?
A. I would centralize my company.
B. I would decentralize my company.
Initially, specialized roles can help GoForLess function more efficiently. However, to address employee dissatisfaction, the company should then consider decentralizing their structure, allowing employees to have a wider range of responsibilities and promoting innovation while staying true to the company's goals.
Explanation:The organizational strategy you choose for your growing business depends largely on your company's needs and the skills of your employees. Given the information provided, it might be beneficial to first choose option B: hiring employees with specific experiences and skills to fulfill certain roles such as infrastructure automation, programming, copywriting, data visualization, and so on. This will contribute to the efficient functioning of your company.
However, after five years, boredom and monotony seem to have settled among your employees, a common issue in highly specialized jobs. To address this, you might want to choose option B again and decentralize your company. This could help by giving employees more autonomy and a wider scope of responsibilities that will not only challenge them but also make their jobs more interesting. They will still maintain their specific roles, but will have the freedom and space to navigate more in their department or across various tasks.
These changes can promote innovation while keeping the company aligned with its initial goals. However, it is essential to maintain clear communication and ensure that everyone understands the company's mission and objectives to not divert from the software's original purpose.
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For a start-up like GoForLess, hiring specialized employees who can form future departments would be beneficial. If employees seem displeased by the repetition of specialized roles, the company can consider decentralization for increased job variety and worker empowerment, while still aligning innovation with the foundation goals of the app.
Explanation:When deciding on organizational designs, you should consider option B. Given the range of skills needed (infrastructure automation, community building, programming, etc.), you would benefit from a workforce specialized in specific areas. Over time, these individuals can form the basis for future departments, supporting the growth and evolving needs of GoForLess. As a leader, you can stay involved and guide the overarching goals and strategic direction.
However, if you notice signs of boredom or dissatisfaction among employees, attributed to the repetitive nature of highly specialized roles, the best approach would typically be to decentralize your company (option B). Decentralization tends to empower employees, give them more variety in tasks, promote creativity, and reduce monotony. Nevertheless, you would need to ensure that 'innovation' is still aligned with the app's fundamental goals, set clear objectives, and establish a healthy feedback culture.
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Baldwin Company had the following balances and transactions during 2019: Beginning Merchandise Inventory as of January 1, 2019 125 units at $82 March 10 Sold 80 units June 10 Purchased 250 units at $86 October 30 Sold 205 units What would be reported as Cost of Goods Sold on the income statement for the year ending December 31, 2019 if the perpetual inventory system and the first-in, first-out inventory costing method are used?
Answer:
Cost of Goods Sold on the income statement for the year ending December 31, 2019 is $ 24,010
Explanation:
First in First Out is an Inventory management system that is build on the idea of selling first the Inventory that came earlier or acquired first.
Perpetual Inventory System Records cost of sale of inventory with each sale
Sale of Inventory was made on March 10,2019 and October 30,2019. It is important to keep track of the cost of sale of inventory on these dates and then find the total which will be presented as cost of sales in the financial Statement
Cost of Goods Sold
March 10,2019 : 80 units × $82 6,560
October 30,2019 : 45 units × $ 82 3,690
160 units × $ 86 13,760
Total Cost of Goods Sold 24,010