The unregulated monopolist's price will always exceed his marginal cost and he will always operate in the elastic portion of his demand curve. True and False

Answer:

A. Strategic Alliance

Explanation:

Strategic Alliance is business relationship that exists between two or more organizations in which they agreed to achieve some business or organizational goals and objectives together while they still maintain their independence.

Advantages of strategic alliance includes:

1.It aids new market entry.

2.It helps to improve and develop product line.

3.It gives competitive advantage.

Types of Strategic Alliance.

Joint ventures and equity alliance.

Answer:

The correct answer is letter "A": strategic alliance.

Explanation:

A strategic alliance is an organizational partnership between two or more organizations sharing resources for a common objective. The common goal frequently includes research and development of specific goods. The parties involved in a strategic alliance typically have a short-term goal. Once the objective has been met, the parties take what they have developed and use it in their existing separate operations.

Answer:

$7,634

Explanation:

The computation of the operating cash flow is shown below:

= EBIT + Depreciation - Income tax expense  

where,  

EBIT = Sales - cost of good sold - depreciation expense  

= $19,740 - $9,290 - $1,960

= $8,490

The income tax expense equal to

= (Sales - cost of good sold - depreciation expense  - interest expense) × tax rate

= ($19,740 - $9,290 - $1,960 - $1,450) × 40%

= $2,816

So, the operating cash flow is

= $8,490 + $1,960 - $2,816

= $7,634

Answer:

Explanation:

   The price of 8% bond must be lower than its face value to make the yield to maturity equal to 10%

Similarly , the price of 12 % bond must be higher than its face value to make the yield to maturity equal to 10%

Rate of return is always equal to yield to maturity .

So even if we do not know the face value of bond , we can infer that rate of return must be equal to yield to maturity .

b ) Higher coupon rate does not guarantee  higher rate of return because higher coupon than the prevailing rate of return in the market pulls down  the market price of the bond .

The rate of return for both bonds would be 10% if their yield to maturity remains constant at 10%. The bond with a higher coupon rate does not offer a higher rate of return if the yield to maturity remains the same.

The rate of return for both bonds, assuming the yield to maturity (YTM) remains at 10%, would be 10%. The rate of return on a bond is essentially its YTM, which is the total anticipated return on a bond if it is held until maturity. This includes both interest payments and the capital gain or loss due to changes in the bond's price.

In a situation where a bond's YTM remains the same from one year to the next, the rate of return would also remain the same (in this case, 10%). Thus, the coupon rate does not affect the rate of return if the YTM remains constant.

So, while the bond with a 12% coupon rate would pay more interest annually than the bond with an 8% coupon rate, it does not offer a higher rate of return in terms of YTM. In this case, the bond with the higher coupon rate does not give a higher rate of return.

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Answer:

Average price for crab leg= $1.428

Marginal cost for extra crab leg= $0

Explanation:

Gustavo pays $39.99 for crab legs

Eats 28 crab legs on Fridays

To get the average price of crab legs divide the total price by the number of crab legs.

Average price= Total price/Number of legs

Average price = 39.99/28

Average price= $1.428

The marginal cost of an extra crab legs is the cost of producing an extra crab leg for Gustavo.

Since Gustavo only eats 28 crab legs and no more

Marginal cost for extra crab leg= $0

Answer:

The correct answer is letter "B": Polychronic.

Explanation:

Chronemics is the study of how time affects communication. It is used to understand the use of time in different cultures. Monochronic cultures are those who value the use of time so they tend to be alert of their watches. Polychronic cultures, on the other hand, are those who consider time is flexible, fluid and driven not exactly by the minute -it could by hours.

Final answer:

The attitude of being flexible with time as described in the situation is characteristic of a polychronic culture, reflecting a more relaxed approach to scheduling and punctuality.

Explanation:

The attitude regarding time as described by the Mexican workers that Will and Christy encountered is best described as polychronic. In polychronic cultures, people often handle multiple tasks simultaneously and maintain a more fluid approach to scheduling and punctuality. This contrasts with monochronic cultures, where time is segmented and schedules are strictly adhered to. Mexican culture tends to value flexibility and a more relaxed view of time, suggesting a polychronic approach to time management.

Answer:

$156 million

Explanation:

The computation of the value of the project is shown below:

Value of the Project = Present Value of Incremental cash Inflows - Upfront Cost

where,

Present Value of Incremental cash Inflows equals to

= (Incremental Cash inflows) ÷ (Discount rate - Growth rate)

= ($50 million) ÷ (12% - 3%)

= ($50 million) ÷ (9%)

= $556 million

Now the value of the project is

= $556 million - $400 million

= $156 million

The value of the project, when considering the initial investment, annual cash flows, growth rate, and firm's WACC, is roughly $155.56 million.

The subject question is about calculating the present value of a project's cash flows, taking into account the company's weighted average cost of capital (WACC) and the growth rate of its future cash flows. This is a common calculation in finance, specifically in the field of investment analysis.

To find the value of this project, we need to determine the present value of its permeating cash flows, which is often referred to as a Perpetuity. The formula for calculating the value of a growing perpetuity is given by:

Present Value = CashFlow / (WACC - growth rate)

Here, the cash flow is the incremental free cash flow of $50 million. The WACC is 12% (or 0.12 in decimal form), and the growth rate is 3% (or 0.03 in decimal form).

So, to calculate:

Present Value = $50 million / (0.12 - 0.03)

This simplifies to:

Present Value = $50 million / 0.09

So, the present value of the project's cash flows is approximately $555.56 million. This is not the project value though, since we need to take into account the upfront cost of $400 million. Subtracting this initial investment from the present value gives us the Net Present Value (NPV) of the project:

NPV = Present Value - Initial Investment = $555.56 million - $400 million = $155.56 million

Therefore, the value of the project, when considering the investment, annual cash flows, growth rate and the firm's WACC, is approximately $155.56 million.

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Answer:

The correct answer is letter "B": There could be supplier interruptions due to political instability.

Explanation:

Single sourcing refers to a company deciding to choose one particular supplier -even if there are many options from where to select- because of a specific reason. The greater disadvantage of this situation is relying on one supplier for the manufacturing process which at a certain point could bring instability in front of different issues inherent or not to the supplier.

Single sourcing is considered risky/bad primarily due to the possibility of supplier interruptions caused by political instability.

The reason that single sourcing is considered risky/bad is option b: There could be supplier interruptions due to political instability. Single sourcing involves relying on a single supplier for a particular product or service. If that supplier experiences any interruptions, such as political instability in their country, it could disrupt the supply chain and impact the availability of the product or service.

For example, if a business single sources a critical component from a supplier in a politically unstable region and there is a sudden change in government or social unrest, it could lead to factory closures or transportation disruptions. This would ultimately affect the business's ability to receive the necessary supplies.

By diversifying suppliers and using multiple sources, businesses can mitigate the risk of supplier interruptions and ensure a more stable supply chain.

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Answer:

Operating Cash flow is $19,440

Explanation:

Operating Cash flow

Sales                         = $38,530

-Costs                        = $12,750

-Depreciation            = $2,550

Operating Income    = $23,230

-Interest Expense     = $1,850

Income before Tax  = $21,380

-Tax                           = $4,490

Net Income               = $16,890

Operating Cash Flow = Net Income + Non-Cash Expenses – Increase in Working Capital

Operating Cash flow = $16,890 + $2,550 - 0

Operating Cash flow = $19,440

The Operating Cash Flow (OCF) of Benson, Inc. is calculated by subtracting costs and taxes from sales. It equals $20,901.7.

The question is asking for the Operating Cash Flow (OCF) of a business, which is a measure of the amount of cash generated by a company's normal business operations. OCF is important because it indicates whether a company is able to generate sufficient positive cash flow to maintain and grow its operations, or it may require external financing.

In this case, the formula to calculate OCF is: OCF = Sales - Costs - Taxes. First, we need to find the taxable income, which is: Sales - Costs - Depreciation. We substitute the numbers: 38,530 - 12,750 - 2,550 = 23,230. Then, we have to calculate the taxes, which are the taxable income multiplied by the tax rate (23,230 * 21%). The tax amounts to 4,878.3. Now we can calculate the OCF: Sales (38,530) - Costs (12,750) - Taxes (4,878.3) = 20,901.7.

The Operating Cash Flow for Benson, Inc., is therefore $20,901.7.

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Answer:

The correct answer is letter "A": monitor, spokesperson, negotiator.

Explanation:

The monitoring function of managers implies following up on the performance of the company and each of its components, whether customers, suppliers or employees. As a spokesperson, executives are the face and voice of the firm in front of other entities and the general public. Finally, as negotiators, managers look for coming up with solutions to improve the company's efficiency and productivity, thus, its profits.

Answer:

rate = 5.50/50 = 0.11 = 11%

I believe it is..

The rate of return is 10 percent.

The net gain or loss of an investment is regarded as a rate of return (RoR), over a specified time period expressed as a proportion of the investment's initial cost. You choose the percentage that changed from the start of the term to the end when figuring out the rate of return. A rate of return can be used to any kind of financial instrument, including stocks, bonds, shares, real estate, and fine art.

Any asset can be used with the rate of return as long as it is purchased once and generates cash flow at any point in the future. Comparing previous rates of return to those of comparable assets is one way to gauge how appealing particular investments are. A needed rate of return is frequently chosen by investors before making an investment decision.

The fundamental growth rate or return on investment are other names for this straightforward rate of return (ROI). The net amount of discounted cash flows (DCF) received on an investment after accounting for inflation is another way to describe the real rate of return if time value of  inflation and  money is considered.

To solve the question :

Price = $50

Dividend = $5

Determine the rate of return:

Rate of return = Dividend / Price

Rate of return = $5 / $50

Rate of return = 10%

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Answer:

5%

Explanation:

Data provided in the question:

Present value of the company, PV = $300,000

Current Profits, π₀ = $11,000

Interest rate, i = 9% = 0.09

Now,          

we know,            

[tex]PV = \pi_0(\frac{1+i}{1-g})[/tex]

here,

g is the growth rate        

on rearranging, we get          

g =  [tex]i - \frac{(1+i)\pi_0}{PV}[/tex]

on substituting the respective values, we get

g = [tex]0.09 - \frac{(1+0.09)\times11,000}{300,000}[/tex]

or  

g = 0.05

or

g = 0.05 × 100%

= 5%

Answer:

A. Forecast for July = 42.

B. Forecast for August = 42.45

C. Because of seasonality in the banking industry.

Explanation:

A. Forecast for July = Forecast for June + Smoothing constant x (Forecasting error)

                                 = 42 + 0.15 (42-42) = 42

B. Forecast for August = Forecast for July + 0.15 (Forecasting error)

                                      = 42 + 0.15 (45-42) = 42.45

C. Because there is a great deal of seasonality in the processing requirements of banking industry, this forecasting method (exponential smoothing) might not be appropriate for this situation.

Final answer:

Net working capital is calculated by subtracting current liabilities from current assets. However, the calculated value does not match any of the provided options, indicating a possible error in the question or a need for additional information.

Explanation:

To calculate the company's net working capital, we need to determine the company's current assets and current liabilities and then subtract the current liabilities from the current assets.

First, to find the current portion of the debt (current liabilities), we take 55 percent of the total debt: 0.55 x $124,250 = $68,337.50.

Next, we calculate the current assets. Since the question does not provide specific current assets, we assume all assets other than net fixed assets are current. This is calculated as follows: Total Assets = Shareholders' Equity + Total Debt = $132,800 + $124,250 = $257,050. Then subtract the net fixed assets from the total assets to find current assets: $257,050 - $176,450 = $80,600.

We subtract the current liabilities from the current assets to get the net working capital: $80,600 - $68,337.50 = $12,262.50. This value does not match any of the provided options, suggesting there might be an error in the question or additional information is needed.

Answer:

a) Only hiring workers who have earned good grades in college.

Explanation:

The Marginal Productivity theory defines as change in revenue of a business resulting due to employment of one additional labor.

This theory has many assumptions that perfect  competition prevails in the market. All workers have same abilities and skills. Productivity of labors can be measured accurately. Every unit is homogeneous etc.

To overcome this information problem a firm should hire only workers who have earn good grades in college. It assumes that these workers will have greater skills and will contribute in revenue contribution to the organization.

Answer: The person may not want to swim again, because the water in the pool will be colder.

Explanation: This decision is influenced this way because, the initiation of a reduction in temperature has prompt a decision process. That means that the swimmer is willing to swim before, but when the temperature has been reduced, the swimmer is likely to consider factors that the change in temperature has caused.

For any decisions to be reconsidered, that means they is likely to be an initiation of an opposing factors to such decision. In this case, the decrease in temperature from 80°C to 50°C is the opposing factor, that has made the swimmer to reconsider if he will swim.

To calculate the depreciation expense per mile for Bramble Company's truck using the units-of-activity method, subtract the salvage value from the purchase price and divide by the estimated total miles. The depreciation expense comes to $0.23 per mile.

The student's question deals with calculating the depreciation expense per mile using the units-of-activity method for a delivery truck purchased by Bramble Company. To find the depreciation expense per mile, we first need to subtract the salvage value from the purchase price and then divide by the total number of miles the truck is expected to be driven over its useful life.

The calculations are as follows:

Depreciation Expense Per Mile = (Purchase Price - Salvage Value) / Estimated Total Miles

Depreciation Expense Per Mile = ($26,000 - $1,160) / 108,000 miles

Depreciation Expense Per Mile = $24,840 / 108,000 miles

Depreciation Expense Per Mile = $0.23 per mile

A CPA should address non-standard financial actions taken by a CFO within a nonprofit organization by documenting the situation and raising it with the board of directors or equivalent oversight body to ensure ethical conduct and proper accountability.

As a CPA reviewing the financial procedures and records of a small nonprofit organization, encountering a case where the CFO has initiated and approved non-payroll checks to an employee for personal matters raises significant ethical and accountability concerns.

In non-profits, the management of finances is expected to be transparent and in accordance with the policies of the organization. The actions taken by the CFO, although well-intentioned, represent a deviation from standard accounting procedures and could potentially lead to questions of misuse of funds or embezzlement. Furthermore, this action could set a precedent that may encourage similar future actions without proper oversight.

Answer:

Option (D) is correct.

Explanation:

Given that,

Variable cost of one unit = $3

Variable cost of two units = $6

Marginal cost refers to the cost of producing an additional unit of an output and it is added to the total cost of production.

Therefore,

Marginal cost:

= Variable cost of two units - Variable cost of one unit

= $6 - $3

= $3

Hence, the marginal cost associated with two units of production is $3.

Answer:

=$33,000

Explanation:

Retained earnings will be the total income minus the dividend paid. For Payson inc. The retained earning as at 31st Dec 2104 will be

net income - divided paid out

=$30,000-$17,000

=$13,000

Total retained earnings as of 31st Dec will be

$13,000 + $20,000

=$33,000

To calculate the retained earnings balance at its December 31 year-end, add the beginning retained earnings, net income, and subtract cash dividends.

To calculate the retained earnings balance at its December 31 year-end, we need to consider the net income and cash dividends for the year. Retained earnings is the sum of the beginning retained earnings balance, net income, and any adjustments for dividends. In this case, the beginning retained earnings balance is $20,000, net income is $30,000, and cash dividends are $17,000. Therefore, the retained earnings balance at December 31 would be:

Retained Earnings = Beginning Retained Earnings + Net Income - Cash Dividends

Retained Earnings = $20,000 + $30,000 - $17,000 = $33,000

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Answer:

a) Bought 400 shares of treasury stock at $40 per share:

Dr Treasury stock                       16,000

Cr Cash                                       16,000

( to record the repurchased of 400 shares at $40 each)

b) Bought 290 shares of treasury stock at $45 per share:

Dr Treasury stock                       13,050

Cr Cash                                       13,050

( to record the repurchased of 290 shares at $45 each)

c) Sold 370 shares of treasury stock at $42 per share:

Dr Cash                                                15,540

Cr Common stock                               14,800

Cr Paid-in capital - common stock     740

( to record the sell of 370 shares repurchased at selling price of $42)

d) Sold 110 shares of treasury stock at $38 per share:

Dr Cash                                                4,180

Dr  Paid-in capital - common stock    620

Cr Common stock                               4,800

( to record the sell of 110 shares repurchased at selling price of $38)

Explanation:

a)

Following  repurchased of 400 shares at $40 each, cash account goes down (Cr) by 40 x 400 = $16,000; Treasury account will go up (Dr) by the same amount.

b)

Following  repurchased of 290 shares at $45 each, cash account goes down (Cr) by 290 * 45 = $13,050; Treasury account will go up (Dr) by the same amount.

c)

As FIFO apply, the selling of 370 repurchased stock will make the Common stock account goes up (Cr) by 40 x 370 = 14,800; Cash account goes up (Dr) by 370 x 42 = $15,540; the difference of 740 will go into (Cr) Paid-in capital - common stock.

d)

As FIFO apply, the selling of 110 repurchased stock will make the Common stock account goes up (Cr) by 30 x 40 + (110-30) * 45 = $4,800; Cash account goes up (Dr) by 110 x 38 = $4,180; the difference of 620 will go into (Dr) Paid-in capital - common stock.

Answer:

In the given scenario, the ATMs of Western Transit Bank can be classified as "capital or financial assets".

Explanation:

Automated teller machines (ATMs) are electronic system for money withdrawal. This system act as capital or financial assets for individuals who saved money in their respective bank accounts, otherwise its just a machine.

Generally people keep only limited cash with themselves due to security or saving purpose. Thus on sudden needs or for regular requirements too it act as asset. This facility has been activated 24*7 for citizens and prevent them from long waiting ques of bank, added with paper work which use to eat huge time of customers, thus it manages their time too.

In the mentioned scenario, the ATMs of Western Transit Bank can be classified as physical distribution channels.

The Automated Teller Machines (ATMs) of Western Transit Bank are considered physical distribution channels as they allow customers to access a variety of banking services. A distribution channel refers to the methods or routes through which a company provides its products or services to customers.

In the context of a bank, ATMs operate as a distribution channel because they allow customers to access banking services such as withdrawing and depositing money, checking their account balances, and transferring money. Essentially, they distribute the bank's services to its customers.

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Answer:

O new goods blas

Explanation:

new products are not included in the index at first, leading the Price to decrease often associated with new technological changes in production does not reflect in the index.

The amount in the account at the end of 15 years is $24,236.69. Hence, option B is correct.

A mutual fund is a collection of investments that a fund manager properly manages. a trust that invests money it receives from several participants with comparable investing goals in stocks, bonds, money market instruments, and/or other securities.

Money market funds, bond funds, stock funds, and target date funds are the four primary categories that the majority of mutual funds belong to. Each variant has unique characteristics, dangers, and benefits.

Mutual funds are frequently seen as risk-free, secure investments that offer excellent diversification opportunities for investors. A mutual fund might not always be the best option for a market participant in terms of expenses.

Thus, option B is correct.

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Final answer:

The amount in the mutual fund at the end of 15 years, with an initial investment of $10,000 and $1250 invested annually at a 4.35% interest rate, is $45,534.50, calculated by summing the future values of periodic investments and the initial lump sum investment, each compounded appropriately.

Explanation:

The question involves calculating the future value of an investment in a mutual fund over a period of 15 years, considering a series of periodic contributions and an initial lump sum already invested. The calculation must account for the power of compound interest and additional annual investments. To find the amount in the mutual fund at the end of 15 years, we must use the future value formula for an ordinary annuity and combine it with the compounded amount of the initial investment.

Calculating the Future Value of Periodic Investments

To calculate the future value of the $1250 annual investments, we use the formula:

FV = Pmt \[((1 + r)ⁿ - 1) / r]

FV = $1250 \[((1 + 0.0435)¹⁵ - 1) / 0.0435]

FV = $1250 \[((1.0435)¹⁵ - 1) / 0.0435]

FV = $1250 * 21.2436

FV = $26,554.50 from periodic investments

Calculating the Future Value of the Initial Lump Sum

The initial $10,000 investment will grow due to compound interest alone. The future value of this lump sum is calculated using the compound interest formula:

FV = PV (1 + r)ⁿ

FV = $10,000 (1 + 0.0435)¹⁵

FV = $10,000 * 1.8980

FV = $18,980.00 from initial investment

Total Future Value

To find the total amount in the account after 15 years, we add the future values from periodic investments and the initial investment:

Total FV = $26,554.50 + $18,980.00

Total FV = $45,534.50

The amount in the mutual fund at the end of 15 years, with an initial investment of $10,000 and $1250 invested at the end of each year at a 4.35% interest rate, is $45,534.50.

Answer:

                      Expenses   Total Assets   Net Income   Total Liabilities

Dreamworks   $22,000      $40,000         $19,000         $30,000

Pixar                $67,000      $150,000        $27,000        $147,000

Universal         $12,000      $68,000          $5,000          $17,000

Debt ratio: Total Debt / Total Assets

Dreamworks = $30,000 / $40,000 = 0.75

Pixar = $147,000 / $150,000 = 0.98

Universal = $17,000 / $68,000 = 0.25

Financial Leverage: Asset / Equity

Dreamworks = $40,000 / (40,000-30,0000) = 4

Pixar = $150,000 / (150,000-147,000) = 50

Universal = $68,000 / (68,000-17000) = 1.33

Pixar Has the most financial leverage.

Final answer:

The debt ratios for Dreamworks, Pixar, and Universal are 75%, 98%, and 25% respectively, with Pixar having the most financial leverage due to its highest debt ratio.

Explanation:

To compute the debt ratio for each company, you divide the Total Liabilities by the Total Assets. The formula looks like this: Debt Ratio = Total Liabilities ÷ Total Assets. Below are the computed debt ratios for each company:

The company with the most financial leverage is Pixar, as it has the highest debt ratio, indicating that a greater proportion of its assets are financed through debt.

Answer:

A) rate of 12%

B) rate of 10%

Explanation:

[tex]PV \div \frac{1-(1+r)^{-time} }{rate} = C\\[/tex]

C   =  10000

n    = 5

PV = 36048

We solve for rate using a financial calculator or try an error or by looking at the PV tables of an annuitiues for the factor at n = 5 which equals PV/C

36048 / 10000 = 3.6048

this give us 12%

we do the same for b:

57,000 / 12,000 = 4.7500

we look for n= 7 for that facotr as; this is annuity-due (payment at the beginning)

which give us 10.000%

we could also use the rte function in excel:

=RATE(5;-12000;57000;;1)The first argument is the time period, then the installemtn and last the present value finally we add to excel that this is an annuity due.

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Estimated manufacturing overhead $75,000

Direct labor hours incurred 4,800

Direct labor hours estimated 5,000

A) Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 75,000/5,000= $15 per direct labor hour

B) Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 15*4,800= $72,000

Answer:

c. exposing himself to unlimited personal liability.

Explanation:

One major characteristic of sole proprietorship being the individual is sole recipient of profits and sole bearer of all risks and liabilities.

A sole proprietor bears unlimited liability in the sense that, in case of bankruptcy, the proprietor's personal assets can be taken away to repay debts owed by him.

Though a proprietor also remains the sole recipient of all gains, similarly the proprietor is also exposed to unlimited risk.

Thus, the correct option is, c. exposing himself to unlimited personal liability   .

Max is exposing himself to unlimited personal liability.

The correct answer is c. exposing himself to unlimited personal liability. When max chose to operate his production studio as a sole proprietorship, he became personally liable for all the debts and obligations of the company. This means that if the business fails or incurs losses, Max's personal assets could be at risk. This is one of the main disadvantages of a sole proprietorship, as it exposes the owner to unlimited personal liability.

Answer:

The statement is: True.

Explanation:

Covered Interest Arbitrage is a trading strategy which investors use to try to take advantage of the differences in interest rates in two currencies. A Forward Currency Contract is used by the Covered Interest Arbitrageur so that they know what exchange rate they will receive when converting their investment back into their original currency.

For example, the interest rate in the Eurozone might be 5% per year, while the interest rate in the U.S. is 3% per year. An American investor with $1,000 in the U.S. would earn $1,030 given a year, while in the Eurozone the investor exchanges the $1,000 which is EUR 915 and earns EUR 960 during the same year. Then, the American investor exchanges back his money into dollars resulting in $1050.

Answer:

The share will cost $37.04

Explanation:

We divide the quarterly dividend by the quarterly rate to get the present intrinsic value of the stock:

13.5% = 13.5/100 = 0.135

now we divide by 4:

0.135 / 4 = 0,03375‬ quarterly rate

1.25 / 0.03375 = 37,037037 = $37.04 value of the share according to the present value of their future cash dividends.

Final answer:

The fair value of the preferred stock that pays a constant quarterly dividend of $1.25 per quarter with a 13.5 percent annual required rate of return is calculated using the present value of a perpetuity formula and is found to be $37.037 per share.

Explanation:

To calculate the fair value (or price) of the preferred stock that is expected to pay a constant quarterly dividend of $1.25 per quarter into the future with a required rate of return, Rs, of 13.5 percent, the formula for the present value of a perpetuity is used. This formula is Price = Dividend per period / Required Rate of Return. In this case, since dividends are quarterly and the rate is annual, we should adjust the rate to a quarterly basis.

First, convert the annual required rate of return to a quarterly rate by dividing by 4, so 13.5% / 4 = 3.375% per quarter. Then, we calculate the price of the share today using the present value of a perpetuity formula:

Price = $1.25 / (0.03375) = $37.037

Therefore, the fair value of the preferred stock is $37.037 per share.

Answer:

$15,761.90

Explanation:

Given that

Amount paid at the end of each year = $1,000

Time period = 50 years

Interest rate = 6% per year

So, the present value of the annuity would be

= Amount paid at the end × PVIFA factor for 50 years at 6% interest rate

= $1,000 × 15.7619

= $15,761.90

Refer to the PVIFA table.

Basically we multiplied the amount with the PVIFA factor.

Final answer:

The present value is calculated using a standard financial formula which is  $15,761.90

Explanation:

The present value of a series of annuity payments is found by calculating the present value of each individual payment and then summing them up. The formula for the present value of an annuity is given by:

PV = P * [(1 - (1 + r)-n) / r]

Where:

PV is the present value of the annuity

P is the amount of each annuity payment

r is the interest rate per period

n is the total number of payments

In this case, P is $1,000, r is 0.06 (6% expressed as a decimal), and n is 50.

= Amount paid at the end × PVIFA factor for 50 years at 6% interest rate

= $1,000 × 15.7619

= $15,761.90