Consider an asset that has a beta of 1.25. If the risk free rate is 3.25 and the mrket risk premium is 5.5% caculate the expected return on the asset.

Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

Answer:

a)                                                        Amount in $  

Balance per bank statement     3,560.20  

Deposit in transit                               530.00  

Outstanding check                      (730.00)

Bank charges                                 25.00  

NSF Check                                       490.00

Book balance                             3,875.20  

b)

Debit Bank charge $25

Credit Cash account $25

Being entries to recognize bank charges for the period.

Explanation:

Considering the transaction, Deposit in transit has been recognized in the books and will thus be added to the balance per bank. The bank charge was deducted from the bank balance but is yet to be deducted from the book balance hence it is added back to the bank balance. The outstanding check has been deducted from the books hence the deduction from the bank. See the reconciliation below.

                                                      Amount in $  

Balance per bank statement     3,560.20  

Deposit in transit                               530.00  

Outstanding check                      (730.00)

Bank charges                                 25.00  

NSF Check                                       490.00

Book balance                             3,875.20  

b) The entries required is the recognition of the bank charge in the books

Debit Bank charge $25

Credit Cash account $25

Being entries to recognize bank charges for the period.

Answer:

THE LOTTERY ONE #IM 13 MY SISTERS IN COLLAGE

Explanation:

The Gambler's Fallacy assumes past outcomes in a random process can affect future ones. The statement "I’ve gotten a low number the last eight times I’ve rolled the dice, so a high number is coming up soon!" reflects this fallacy, wrongly asserting that a high number is imminent following a string of low numbers.

The Gambler’s Fallacy involves the incorrect belief that past outcomes in a random process can influence future outcomes. This fallacy is often present in situations involving chance and probability. For instance, if you flip a fair coin and it lands on heads five times in a row, the gambler's fallacy would be to assume that the next flip is more likely to be tails, when in reality, the probability is still 50-50 for each flip.

From the given options, the statement that represents the gambler’s fallacy is: "I’ve gotten a low number the last eight times I’ve rolled the dice, so a high number is coming up soon!" This is a classic example of Gambler's Fallacy, as it incorrectly assumes that after a string of low numbers, a high number is due, when in reality, each roll of dice is independent and has an equal chance of resulting in low or high numbers.

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Answer:

Consider the following calculation

Explanation:

Given daily demand d= 870 feet

Lead time L = 6 days

Reorder point = Demand during lead time + Safety stock

Demand during lead time = dL = 870*6 = 5220

Safety stock = 1900 as service level ois 95 percent. So stockout risk = 1-0.95 =0.05.Given at stockout risk 0.05

safety stock = 1900

Reorder point = 5220 + 1900 = 7120

The appropriate reorder point quantity is calculated by considering the lead time and desired service level, as well as the stockout risk and safety stock levels. The calculations for the given scenario result in different reorder point quantities based on the chosen safety stock level and its associated stockout risk.

To determine the appropriate reorder point quantity, we need to consider the lead time and the desired service level. The reorder point is the level at which we should place an order to replenish our stock. It is calculated by multiplying the average demand during the lead time by the desired service level and adding the safety stock.

In this case, the average demand during the lead time is 950 feet per day multiplied by 7 days, which gives us 6650 feet. Given the stockout risk for various levels of safety stock and their corresponding probabilities, we can calculate the appropriate reorder point quantity.

Based on these calculations, the appropriate reorder point quantity would vary depending on the desired stockout risk and the corresponding safety stock level.

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Answer:

Option (A) is correct.

Explanation:

Given that,

After-tax IRR on total investment in the property = 9.0%

Before-tax IRR on equity invested = 17%

Before-tax IRR on total investment in the property = 12%

t: Marginal tax rate = 0.40

Break Even Interest rate (neither favorable nor unfavorable):

= After tax IRR on total investment ÷ (1 - Tax rate )

= 9% ÷ (1 - 0.40)    

= 9% ÷ 0.60

= 15%

Answer:

8.00%

Explanation:

Data provided in the question:

Selling price of the bond i.e current value = $270

Future value = $1,850

Maturity time, t = 25 years

Now,

Effective yield to maturity, r = [tex](\frac{\text{Future value}}{\text{Current value}})^{\frac{1}{t}}-1[/tex]

on substituting the respective values, we get

Effective yield to maturity, r = [tex](\frac{\$1,850}{\$270})^{\frac{1}{25}}-1[/tex]

or

Effective yield to maturity, r = 1.0800 - 1

or

Effective yield to maturity = 0.0800

or

= 0.0800 × 100% = 8.00%

Answer:

Net Present Value (NPV) = $ 115,998

Explanation:

Calculation of the Net Present Value

Net Present Value = Cash Inflows - Cash Outflows

NOI from 6th year =  80,000*115% = 92,000

NPV = 80000 (PVAF, 5 year) + 92,000 (PVAF, (105), 9.5%) + 830,000/(1.095)10 - 750,000

NPV = (80,000 x 3.839) + (92,000 x 2.439) + (830,000 x 0.403) - 750,000

= 307,120 + 224,388 + 334,490 - 750,000

The Net Present Value will be $ 115998

The net present value of the property is approximately $95,235.12.

To calculate the net present value (NPV) of the property, we need to discount the cash flows from the property at the given discount rate. The formula to calculate NPV is:

NPV = CF0 + Σ(CFt / (1+r)t) - C0

In this case, CF0 is the initial purchase price (-$750,000), CFt is the expected cash flow in year t, r is the discount rate (0.095), and C0 is the expected resale price in year 10 (+$830,000). We need to calculate the present value of each year's cash flow and then sum them up to find the NPV.

The cash flows for each year can be calculated as follows:

Substituting these values into the formula and summing up the discounted cash flows, the net present value of the property is approximately $95,235.12.

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Answer:

Consider the following calculations

Explanation:

a. MPC = dC/dY =30-10/30 =2/3

b. MPC will be smaller because the MPC relies heavily upon the real (inflation-adjusted) rate of interest.And crowding out causes increase in interest rate. A high rate of interest causes spending in the future to become increasingly attractive due to the intertemporal substitution effect on consumption.

Because a rate increase primarily decreases the present value of lifetime wealth, the consumer relies on becoming a lender to offset this effect. In a two period model, as S(1+r) increases with the interest rate, so does future income[C= -(1+r)c +we(1+r)]. Therefore, every dollar of current income spent by the consumer is 1(1+r) dollars the consumer will not be able to spend in the second period.

Answer:

Public relation

Explanation:

Public relation is assumed to be one of the most efficient tool for making good healthy relation in market. it is practical tool that work firmly and efficiently with cost effective way to promote the business to the next level.

public relation make awareness among the potential customer in a short time period effectively.

Answer and Explanation:

When a negative externality exists, and the government does not intervene, then the market equilibrium is where Internal demand is  equal to the internal cost and socially optimal equilibrium with negative externality exist where the internal demand is equal to the social cost.

Answer:

Louise's defense is not valid. She was involved in an Implied-in-fact contracts

Explanation:

Implied-in-fact Contracts

This is a contract that is legally enforceable as a result of an agreement made by conduct and from assumed intentions. These conducts and assumed intentions are derived from the relationship among the involved parties.

When Louise saw Midcity Painters painting her house and made no comments, she became involved a implied-in-fact contract. The conduct of Midcity to paint her house and her conduct to be quiet infact formed a legally enforceable contract.

Louise, therefore, liable. However, due to the lack of contractual terms such as payment for the job done, Louise will be liable for the nominally or typically acceptable rate for such a job done. For instance, if a normal house paint job costs $2000, Louise is liable to pay $2000 for the implied contract.

This situation involves the legal principle of Quasi Contracts. Although Louise did not formally agree to the contract, she may be held liable for payment, depending on the jurisdiction, her knowledge and the magnitude of the mistake made by Midcity Painters.

From the legal perspective, this situation falls under the principle of Quasi Contract, or an implied contract. Although Louise did not formally agree to a contract with Midcity Painters, she took advantage of their services without objecting while the work was in progress. Therefore, the law might see her as unjustly enriched at the expense of Midcity Painters.

However, whether this defense is valid or not depends on the specific jurisdiction and the court's interpretation of the situation. Some jurisdictions hold that silence does not constitute acceptance, while others say that if Louise knew the work was being done mistakenly and did not prevent it, she could be held liable for payment.

Moreover, the court might consider the scope of the mistake made by Midcity Painters. If it was a minor mistake and Louise knew about it and let them continue, she may be held accountable. However, if it was a major mistake, the law might absolve her from liability.

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Answer:

Option (D) is correct.

Explanation:

We have to use MM proposition that cost of equity will change itself in such a manner so that it can take care of its debt.

Cost of equity:

= WACC of all equity firm + (WACC of all equity - Cost of debt ) × (Debt -to-equity ratio)

At the beginning, when there was no debt,

WACC = cost of equity = 10%

Levered cost of equity:

= 10% + ( 10% - 6%) × 0.2

= 10.8%

Therefore, Taggart's levered cost of equity would be closest to 11%.

Under perfect capital markets, Taggart's levered cost of equity after borrowing at a 6% interest rate with a debt-to-value ratio of 20% would be 11%. This result is obtained using the Modigliani-Miller theorem, which adjusts the unleveraged cost of capital with the debt-induced financial risk.

The levered cost of equity represents the returns required by equity investors after considering the financial risk associated with the firm's debt. To calculate the new levered cost of equity after borrowing at a certain interest rate, the Modigliani-Miller theorem is usually used.

The formula is Relevered = Reunlevered + (Reunlevered - Rd) *(Debt/Equity). In this case, Reunlevered (unleveraged cost of capital) is 10%, the borrowing cost (Rd) is 6%, and Debt/Equity ratio is 0.25 (because Debt/Asset ratio given is 20%, hence in a scenario with perfect capital markets, Debt/Equity becomes 20%/80%, which equals 0.25).

Applying these values to the formula gives Relevered = 10% + (10% - 6%) * 0.25 = 11%. Therefore, the levered cost of equity is 11% making the correct choice D) 11.0%.

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The Lotus Point Condo Project can be interpreted as an integer programming problem for maximizing profits. The problem can be modeled with variables representing homes, apartments, and the decision to build either a marina or a swimming-tennis complex. The resulting linear equation and constraints represent the profit and the project requirements respectively.

The problem can be understood as a linear integer programming problem. In this type of problem, we are aiming to maximize or minimize a linear function, subject to certain linear constraints. Our function in this case is the profit, which we aim to maximize.

The variables for this integer program could be defined as follows:

The objective function, which represents the profit, can be represented as follows:

Maximize Z = 46,000H + 48,000A - 40,000(H + A) - 1,200,000M - 2,800,000S

The constraints can be defined as follows:

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Answer:

$3,092,544

Explanation:

The computation of the decreased in retained earning is shown below:

= (Number of shares × stock dividend percentage × market price of the stock) + (Number of shares × current year dividend × cash dividend)

=  (504,000 × 0.16 × $34) + (504,000 × 1.16 × $0.60)

= $2,741,760 + 350,784

= $3,092,544

Simply we added the two amount based on before 3 months later and after 3 months later

The 1.16 is computed below:

= 1 + 0.16

= 1.16

Answer:

The company must set aside $1,985,976.79 each year for this purpose

Explanation:

Data provided in the question:

Required payment = $24,800,000

Time = 9 years

Interest rate = 8% = 0.08

Now,

Required payment = A × [( ( 1+ r )ⁿ - 1) ÷ r ]

Here,

A is the amount required to be set aside each year

Therefore,

$24,800,000 = A × [( ( 1+ 0.08 )⁹ - 1) ÷ 0.08 ]

or

$24,800,000 = A × 12.48755

or

A = $1,985,976.79

Hence,

The company must set aside $1,985,976.79 each year for this purpose

Answer:

Maximum inventory level is 520 units

Explanation:

Given,

C0 = $50

Ce = $10

D = 30,000 units

d = D / Days

= 30,000 / 300

= 100 units per day

p = 1,000 units

Computing the optimal order size with the formula as:

Qopt  = √ 2 C0 D / Ce (1- d / p)

=√ 2 (50) (30,000) / $10 (1 - 100 / 1,000)

= 577.36

Computing the maximum inventory level as:

Maximum inventory level =Qopt ( 1 - d/ p)

= 577.36 ( 1- 100 / 1,000)

= 519.624 unit or 520 units

Answer:

1)  C=C1+C2...+Cn

2) A=A1+A2...+An

3) Explanation is in the description

Explanation:

First, we have that the information given is incomplete. We need the information of the manufacturing overhead of Orlando Enterprises. Then, we are going to work on the problem without any specific data and give a general answer that will serve for any such data.

The attached table shows a way to represent the information of the manufacturing expenses, where the left column represents the current costs and the right column the allocated costs.

1) Current manufacturing overhead is then given by:

C=C1+C2...+Cn

2) 2) The allocated manufacturing overhead is given by:

A=A1+A2...+An

3) Finally, to determine if manufactured overhead is underallocated or overallocated:

X=C-A

If x>0, the manufactured overhead is udercalled.

The transactions listed are common retail transactions that include purchases, sales (cash and credit), merchandise returns, and receipts of payment. Each transaction has specific impacts on Sparky's Pet Shop's financial position in terms of cash, merchandise inventory, accounts payable, and accounts receivable.

The first transaction was a purchase on account from a supplier for $6,000 of merchandise with terms 2/10, n/30. This means Sparky's Pet Shop can take a 2% discount if they pay within 10 days but the full amount is due within 30 days.

On August 3, Sparky's Pet Shop returned $1,500 of defective merchandise. So, the new amount due to the supplier is $4,500 ($6,000-$1,500).

On August 7, the store recorded cash sales of $9,750, this increased the cash balance and decreased the inventory by the merchandise cost of $4,000.

On August 10, they sold items on account to a local breeder for $500 on credit, terms 1/10 n/30 with a cost of $200.

On August 11, payment was made for the merchandise purchased on August 1, the amount that was paid is $4,500 which is the total cost of purchase less the returns.

Finally, on August 20, they received payment from the sale made on August 10, this decreased accounts receivable by $500 and increased cash by $500.

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Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

Answer:

A) buy the product in Hong Kong and sell it in Shenzhen so eventually the price in Shenzhen will decrease and the price in Hong Kong will increase

Explanation: when the price of the product in Shenzhen reduces due to the low priced product being sold in same place the high priced is sold, this would even out the demands and the price of that in Shenzhen would be dragged down to be able to compete with that of the low priced.

Answer:

Explanation:

The journal entry is shown below:

Inventory A/c Dr $73,500

         To Accumulated depletion A/c $73,500

(Being the depletion is recorded)

The computation is shown below

First we have to compute the depletion per ton which is shown below:

= (Acquired cost of coal mine + Intangible development costs + fair value of the obligation - Sale value) ÷ (Number of estimated tons of coal extracted)

= ($400,000 + $100,000 + $80,000 - $160,000) ÷ (4,000 tons)

= $105

Now if 700 are extracted in first year, so the depletion would be

= 700 × $105

= $73,500

Answer:

Option (C) is correct.

Explanation:

The goods with a perfectly inelastic demand with any changes in the prices of the commodities are generally have no effect on the demand for a good. This means that if there is an imposition of tax on the good with a perfectly inelastic demand then this will lead to increase the price level by the full amount and therefore, the incidence of this tax is fully borne by the consumers.

Answer:

unemployment

Explanation:

Okun' law is an association that describes unemployment in a country based on the observation of a decline in Real GDP in the country. According to the interval and related model, every 1% increase in unemployment leads to a 2% deviation from the country's GDP potential. The difference model explains the relationship between unemployment and real GDP changes in the quarters. The law was named Arthur Okun in 1962, recognizing these relations. Arthur Okun, who examines the growth Real GDP and unemployment figures of the American economy, has found that unemployment rates have declined in those years when the real growth rate is high, and, on the contrary, the rise in unemployment rates has been low or even negative. This means the negative correlation between them. Arthur Okun's statement of the link between real growth and unemployment in a formula has led to this idea being later called Okun's law. Okun's law is that when real growth rates exceed 2.25%, increasing real incomes by more than 2.25% will result in a 0.5% drop in unemployment. For example, in a year when national income increased by 5.25%, unemployment declined by 1.5% (5.25% to 2.25% = 3% and 3% / 2% = 1.5%).

Answer:

$6.30

Explanation:

For computing the unit price, first we have to determine the difference in cost which is shown below:

= $150,000 - $120,000

= $30,000

Now the break even price would be

= Variable cost + cost difference

= $600,000 + $30,000

= $630,000

So, the unit price would be

= Break even price ÷ number of unit produced

= $630,000 ÷ 100,000 units

= $6.30

Answer:

E) word-of-mouth influence

Explanation:

Answer:

The amount invested in M = $8,000

The amount invested in N = $12,000

Explanation:

Data provided in the question:

Total amount invested = $20,000

Expected return on portfolio = 14%

Expected return on M = 20% = 0.20

Expected return on N = 10% = 0.10

Now,

Let the amount invested in M be 'x'

thus,

Amount invested in N will be = $20,000 - x

Thus,

According to the question

0.20(x) + 0.10($20,000 - x) = 0.14($20,000)

or

0.20x + $2,000 - 0.10x = $2,800

or

0.10x = $800

or

x = $8,000

Therefore,

Amount invested in N will be = $20,000 - $8,000

= $12,000

Hence,

The amount invested in M = $8,000

The amount invested in N = $12,000

The answer is option a, which states that an invention sought to be patented is a living creature. Since Diamond v. Chakrabarty, genetically modified organisms can be patented, making option a incorrect as a reason for denial.

The correct answer to the student's question about a valid condition for denying a patent application is option a: The "invention" sought to be patented is actually a living creature. After the 1980 Diamond v. Chakrabarty case, it became possible to patent genetically modified organisms, meaning that living creatures, if altered by humans, could be subject to a patent. This decision allowed for the patenting of genetically modified bacteria, plants, and even specific genes, as long as they met the criteria of being distinct, new, and not naturally occurring.

Options b, c, and d represent legally recognized reasons for denying a patent. In option b, if an invention was previously known or documented, it is not considered novel and therefore not patentable. Option c, abandonment, refers to a situation where the inventor stops pursuing the patent without a good reason, and in option d, one must be the true inventor to apply for a patent. However, none of these options represents a barrier to entry that is both a valid reason for denying a patent and directly government-enforced.

Answer:

1.45

Explanation:

Investment:

Stock B = $20,000

Stock D = $50,000

Stock F = $30,000

Total investment = $20,000 + $50,000 + $30,000

                            = $100,000

Weight:

= Investment ÷ Total investment

Therefore,

Weight of Stock B:

= $20,000 ÷ $100,000

= 0.2

Weight of Stock D:

= $50,000 ÷ $100,000

= 0.5

Weight of Stock F:

= $30,000 ÷ $100,000

= 0.3

Beta of the portfolio:

= (Weight of Stock B × Beta) + (Weight of Stock D × Beta) + (Weight of Stock F × Beta)

= (0.2 × 1.5) + (0.5 × 2.0) + (0.3 × 0.5)

= 0.30 + 1 + 0.15

= 1.45

To compute the portfolio beta, multiply the beta of each asset by its proportion of the total investment, then sum the values. In this instance, the beta for the investment portfolio containing assets B, D, and F is 1.45.

The beta of a portfolio is the average of the betas of the individual investments proportionate to their respective share of the total investment. To calculate the beta for the combination of assets B, D, and F, we multiply the beta of each asset by its proportion of the total investment (!20,000/$100,000 for asset B, $50,000/$100,000 for asset D, and $30,000/$100,000 for asset F), and sum these values.

The calculations would look like this:

Adding these together, the beta of this investment portfolio would be 0.3 + 1 + 0.15 = 1.45

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Answer:

a) 275,000 boxed per year

b) sales price of $ 11.04

c) sale volume in dollars 4.830.967,74

Explanation:

selling price:   $ 9.60

Variable cost:  $ 5.76

Contribution:   $ 3.84

Contribution Ratio: 3.84 / 9.60 = 40%

[tex]\frac{Fixed\:Cost}{Contribution \:Margin} = Break\: Even\: Point_{units}[/tex]

1,056,000 / 3.84 = 275,000

If Variable cost increase by 15%

To keep contribution ratio at 40% then selling price should be:

(X - 5.76 x 1.15) / X = 0.40

X = $ 11.04

To keep the same income but without changing price:

current income: (sales x contribution less fixed cost)

(390,000 x 3.84 - 1,056,000) = 441,600

contribution: (9.60 - 5.76 x 1.15) / 9.60 = 0.31

[tex]\frac{Fixed\:Cost + Target \: Income}{Contribution \:Margin} = Break\: Even\: Point_{units}[/tex]

(1,056,000 + 441,600)/ 0.31 =

1.497.600‬ / 0.31 = 4.830.967,74

For the current year, Doyle’s Candy Company's break-even point is 184,211 boxes. In order to cover a 15% increase in variable production costs while maintaining the current contribution margin percentage, the selling price per box would need to be $9.20. The company would need to significantly increase its sales volume within the coming year to maintain the same after-tax net income if costs increase.

A. The break-even point is determined by the equation Total Fixed Costs / (Selling Price per unit - Variable Cost per unit). In this case, it would be calculated as $1,056,000 / ($9.60 - $5.76) resulting in 184,210.53 boxes. However, as it is not feasible to sell a fractional box, we would round up to 184,211 boxes.

B. To maintain the current contribution margin percentage while covering a 15 percent increase in variable production costs, we need to firstly determine the new variable cost which is $4.80 * 115% = $5.52. Then, the new selling price would be calculated as $5.52 / (1 - Current Contribution Margin %), where Current Contribution Margin % = ($9.60 - $5.76) / $9.60 = 40%. Therefore, the new selling price = $5.52 / 0.6 = $9.20.

C. To maintain the same net income after taxes, Doyle's Candy Company would need to achieve higher pre-tax income due to the increased cost of goods sold. This means that they would need to sell more boxes even if the selling price stays the same. The new volume of sales, in dollar terms, would be calculated as follows: (Total Fixed Costs + Desired After-tax Net Income / (1 - Tax Rate)) / (Selling Price - New Variable Cost).

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Answer:$75,680

Explanation:8% of 44000=3,520. For 9years= 3520×9=31680. Total money at the end= principal+interest= 44000+31680=75680

Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.