Answer:
A.-90
B.What I think of the option is that it will be extremely risky reason been that her expected value was a loss in (a).
Explanation:
Option on stock $150
Loss$650
Percentage 70 %
A.
150*.70= $105
100%-70%
=30%
-650*.30
= -195
$105 + (-195)
= -90
Therefore the expected value of the option's is losing 90
b.
What I think of the option is that it will be extremely risky reason been that her expected value was a loss in (a).
During step 3 of activity-based costing, activity overhead cost pool rates are used to assign overhead costs to final cost objects. Proper determination of activity rates depends on all of the following: proper calculation of total overhead costs proper assignment of costs to cost objects proper determination of factors which drive costs proper measurement of activities Rate your confidence to submit your answer.
Answer:
HEY
Explanation:
The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a dealer and then sold the cars after three years of use. The company’s present fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives:
Purchase alternative: The company can purchase the cars, as in the past, and sell the cars after three years of use. Ten cars will be needed, which can be purchased at a discounted price of $27,000 each. If this alternative is accepted, the following costs will be incurred on the fleet as a whole:
Annual cost of servicing, taxes, and licensing $ 4,300
Repairs, first year $ 2,200
Repairs, second year $ 4,700
Repairs, third year $ 6,700
At the end of three years, the fleet could be sold for one-half of the original purchase price.
Lease alternative: The company can lease the cars under a three-year lease contract. The lease cost would be $70,000 per year (the first payment due at the end of Year 1). As part of this lease cost, the owner would provide all servicing and repairs, license the cars, and pay all the taxes. Riteway would be required to make a $15,000 security deposit at the beginning of the lease period, which would be refunded when the cars were returned to the owner at the end of the lease contract.
Riteway Ad Agency’s required rate of return is 20%.
Required:
1. Use the total-cost approach to determine the present value of the cash flows associated with each alternative. (Any cash outflows should be indicated by a minus sign. Round discount factor(s) to 3 decimal places.)
Answer:
The present value of purchase is $ 209,907.41
The present value of lease is $ 153,773.15
Find attached spreadsheet.
Explanation:
The present of value of both options need to be calculated in order to determine the viable option:
Present value of purchase=($27,000*10)+($4,300+$2,200)/(1+20%)^1+($4,300+$4,700)/(1+20%)^2+($4,300+$6,700)/(1+20%)^3-($27000*10*0.5)/(1+20%)^3=$209,907.41
Present value of lease option=$15,000+$70,000/(1+20%)^1+$70,000/(1+20%)^2+$70,000/(1+20%)^3-$15,000/(1+20%)^3=$ 153,773.15
Mountain High Ice Cream Company transferred $63,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,300). Mountain High anticipates a $3,300 recourse obligation. The bank charges a 3% fee (3% of $63,000), and requires that amount to be paid at the start of the factoring arrangement. Required: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Journal entries for Mountain high Ice cream is given below
Explanation:
Journal entries:
Debit Credit
Cash 54810(w1)
Loss on receivables 6190
Factoring amount 5300(fair value)
Recourse liability 3300
Receivables 63000
Workings 1
63000 x 90%-3% = 54810
As part of an economics class project, students were asked to randomly select 500 New York Stock Exchange (NYSE) stocks from the Wall Street Journal. As part of the project, students were asked to summarize the current prices (also referred to as the closing price of the stock for a particular trading date) of the collected stocks using graphical and numerical techniques. Would this be an application of descriptive or inferential statistics
Answer:
Descriptive Statistics
Explanation:
Descriptive Statistics is a technique in which data is collected and then analysis is made on the selected data through numerical techniques or graphs. In the given question the students have selected stocks and are analyzing its performance through graphical and numerical technique. This is descriptive statistics.
After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only person voting for you. The company has 430,000 shares outstanding, and the stock currently sells for $51, If there are four seats in the current election, how much will it cost you to buy a seat
Answer:
$4,386,051
Explanation:
For computation of cost to buy a seat first we need to follow some steps which is shown below:-
Step 1 :
Number of seats available for election = 4
So, the percentage of stock needed = 1 ÷ (4 + 1)
= 20%
Step 2
Number of Stock needed = (Outstanding shares × Percentage of stock) + 1
= (430,000 × 20%) + 1
= 86,000 + 1
= 86,001
and finally
Total cost required to buy a seat = Number of Stock × Stock Currently Sold
= 86,001 × $51
= $4,386,051
So, we have applied the above formula.
A high-end clothing manufacturer has a policy to inspect each article of clothing before it is shipped to customers. Recently, the number of finished items that are failing this final inspection has more than doubled from 3% six months ago to 7% last month. This company would benefit from a strategy designed to:
Answer:
Examine the reliability of the process.
Explanation:
As a high end clothing company, it is a very good initiative and welcoming to have clothes that possibly posses global version and global value so it is good for such routine checks to be done. This could be tedious and cost the company more than usual.
In this case where there are a reasonable amount of such clothes failing these routine checks, it is not too good for the company as more re-evaluations are to be done in order to cub the rate at which this is in the last six months. This process of examining the reliability process is the company's best bet to tackle the issue they have at hand.
Complete the following table by selecting the term that matches each definition on the left.
Definition
1. Market Labor Demand Curve
2. Market Labor Supply Curve
3. Marginal Product of Labor
4. Value of the Marginal Product of Labor
a. The additional revenue the firm receives from selling the output produced from an additional unit of labor.
b. The graphical representation of the relationship between the wage rate and the quantity of labor workers are willing to provide in a market.
c. The graphical representation of the relationship between the wage rate and the quantity of labor firms are willing to hire in a market.
d. The increase in the amount of output from an additional unit of labor.
Answer:
The correct answers are the following:
1 - C
2 - B
3 - D
4 - A
Explanation:
1 - C: The market labor demand curve is represented graphically by the relationship between the wage rate and the quantity of labor firms are willing to hire in a market due to the fact that the firms are the ones who are looking for workers and therefore they demand it.
2 - B: The market labor supply curve is represented graphically by the relationship between the wage rate and the quantity of labor that the workers are willing to provide due to the fact that they are the one who put their work in the market in order to be used.
3 - D: The marginal product of labor represents the increase in the amount of output from an additional unit of labor that an additional worker puts in the firm.
4 - A: The value of the marginal product of labor comprehends the additional revenue the firm receives from selling the output produced from and additional unit of labor that an additional worker put in the firm.
Which of the following statements is CORRECT? a. The advantage of the basic earning power ratio (BEP) over the return on total assets for judging a company's operating efficiency is that the BEP does not reflect the effects of debt and taxes. b. The price/earnings (P/E) ratio tells us how much investors are willing to pay for a dollar of current earnings. In general, investors regard companies with higher P/E ratios as being more risky and/or less likely to enjoy higher future growth. c. Other things held constant, the less debt a firm uses, the lower its return on total assets will be. d. Suppose you are analyzing two firms in the same industry. Firm A has a profit margin of 10% versus a margin of 8% for Firm B. Firm A's total debt to total capital ratio is 70% versus 20% for Firm B. Based only on these two facts, you cannot reach a conclusion as to which firm is better managed, because the difference in debt, not better management, could be the cause of Firm A's higher profit margin.
Answer: The advantage of the basic earning power ratio (BEP) over the return on total assets for judging a company's operating efficiency is that the BEP does not reflect the effects of debt and taxes
Explanation:
a. This is correct.
The advantage of basic earning power ratio over the return on the total assets for judging a firm's operating efficiency is that the basic earning power does not reflect effects of debt and taxes.
b. This is incorrect.
Only the price/earnings ratio of the company will tell us nothing about a company. When we compare the price/earnings of a company with the peers, we would know whether such company is under valued, or over valued or maybe fairly valued.
c. This is incorrect.
The total assets is made up of total liabilities plus the shareholders equity, when other things are held constant, less debt simply means less liabilities. To balance both sides, the total assets should reduce as the shareholder's equity is constant. When total assets decreases, the return on the assets will increase.
d. This is incorrect.
We can reach a conclusion on which firm is better managed based on the facts given. The debt ratio is the total liabilities divided by total assets, and a lower ratio is known to be good in comparison to a higher ratio. Similarly, the profit margin is the profit divided by the sales, and low profit margin shows high expenses and also a need for the management to decrease the expense.
Robinson Company purchased Franklin Company at a price of $2,500,000. The fair market value of the net assets purchased equals $1,800,000. 1. What is the amount of goodwill that Robinson records at the purchase date? 2. Does Robinson amortize goodwill at year-end? 3. Robinson believes that its employees provide superior customer service, and through their efforts, Robinson believes it has created $900,000 of goodwill. Should Robinson Company record this goodwill?
Answer:
Explanation:
Goodwill is defined as the excess in amount of the purchase price of a company over the fair value at acquisition.It is intangible in nature , meaning it can not be physically separated from the other assets. Example are patent , brand name , good employee relation.
1.
Goodwill calculation
Purchase price - $2,500,000
Fair value - $1,800,000
Goodwill - $700,000
2.
No
Under the IAS 36, impairment of assets , goodwill is not amortized but annually tested for impairment as amortization is applicable to intangible assets with a definite useful life while intangible assets with indefinite useful life are annually tested for impairment to evaluate a loss in value experienced.
3
No
Under IAS 38 , Internally generated goodwill are not recognized as no related cost is incurred towards achieving a future benefit
Karen Bartlett was given a generic version of Sulindac, an anti-inflammatory drug. The result was that she developed toxic epidermal necrolysis, a disease that disfigured and blinded her. She brought suit alleging that there were warnings that should have been put on the generic version of the drug because issues with the skin infections were being reported. However, the manufacturer to Sulindac did not have FDA approval to place the warning on the product. The jury awarded Ms. Bartlett $21 million, and the generic manufacturer appealed the decision. Which of the following theories would be the best approach for the generic manufacturer to take in order to have the verdict reversed?
a. the commerce clause
b. substantive due process
c. preemption
d. due process because of the excessive size of the verdict
Answer:
option c: Preemption
Explanation:
preemption can simply be defined as the rule of law that proclaims the federal law and the constitution as the supreme law in all the land so therefore if there is a case whereby there is a conflict between a federal and a state law, the federal law will be in absolute control and this will render the state law to be void.
there are two primary occasion that will warrant preemption they are where clearly, federal law preempts state or local law, and also where preemption is implied. different kind of preemption can also be said to be express preemption, implied preemption, field preemption, conflict preemption and frustration of purpose preemption.
Metro Services, Inc. reported the following information for the year 2019. Based on the following information, calculate the rate of return on total assets for Metro Services, Inc. (Round the percentage to two decimal places.)Total Assets, December 31, 2019$599,000Total Assets, December 31, 2018$505,000For Year Ended December 31, 2019: Interest Expense$27,900 Net Income$67,100A. 7.78%B. 7.10%C. 11.20%D. 17.21%
Answer:
Option D,17.21% is correct
Explanation:
The total assets deployed in generating profit for the year is the average of the beginning assets of $599,000 and the closing assets of $505,000 which translated into $552,000 i.e ($599,000+$502,000)/2
The total return on assets is the profit before interest, hence the interest of $27,900 is added to net income of $67,100 to give total return on assets in dollar terms i.e $95,000($27,900+$67,100)
The return on total assets=total return/average assets=$95,000/$552,000=17.21%
Shop –N-Go Systems purchased cash registers on April 1 for $6,000. If this asset has an estimated useful life of four years, what is the netbook value of the cash registers on May 31 if the company uses the straight-line method of depreciation?
Answer:
Depreciation= $250
Explanation:
Giving the following information:
Purchasing price= $6,000
Useful life= 4 years
Depreciation= straight-line
First, we need to calculate the annual depreciation:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= 6,000/4= 1,500
Now, the depreciation for two months:
Depreciation= (1,500/12)*2
Depreciation= $250
Cute Camel Woodcraft Company just reported earnings after tax (also called net income) of $8,000,000, and a current stock price of $25.75 per share. The company is forecasting an increase of 25% for its after-tax income next year, but it also expects it will have to issue 1,500,000 new shares of stock (raising its shares outstanding from 5,500,000 to 7,000,000) If Cute Camel's forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does the company's management expect its stock price to be one year from now? (Round any P/E ratio calculation to four decimal places).
A. $25.22 per share
B. $25.75 per share
C. $18.92 per share
D. $31.53 per share
One year later, Cute Camel's shares are trading at $49.60 per share, and the company reports the value of its total common equity as $35,308,000. Given this information, Cute Camel's market-to-book (M/B) ratio is ___________
Can a company's shares exhibit a negative P/E ratio?
A. No
B. Yes
Which of the following statements is true about market value ratios?
A. Companies with high research and development (R&D) expenses tend to have low P/E ratios
B. Companies with high research and development (R&D) expenses tend to have high P/E ratios.
The stock price one year from now will be A. $25.22 per share .
The market to book value after one year is 9.833.
A company's shares can exhibit a negative P/E ratio. This is true.
The true statement is that companies with high research and development (R&D) expenses tend to have high P/E ratios.
How to calculate the valueCurrent year price earning ratio = 25.75*5500000/8000000
17.7
current price earning = 17.70
next year earning = 8000000*(1+25%)
10000000
If PE ratio remains constant next year then share price next year is
10000000*17.70/7000000 = 25.22 per share
Market to book value after one year = (7000000*49.60)/35308000 = 9.833.
It should be noted that because of negative earing of the company negative PE ratio is possible. Hence PE ratio negative is possible
Lastly, company who spend high research and development expenses to have high P/E ratios
Learn more about stock on:
https://brainly.com/question/28539863
#SPJ1
The Coca-Cola Company and PepsiCo, Inc. provide refreshments to every corner of the world. Suppose selected data from recent consolidated financial statements for The Coca-Cola Company and for PepsiCo, Inc. are presented here (in millions).
Coca-Cola PepsiCo
Total current assets $17,551 $12,571
Total current liabilities 13,721 8,756
Net sales 30,990 43,232
Cost of goods sold 11,088 20,099
Net income 6,824 5,946
Average (net) accounts
receivable for the year 3,424 4,654
Average inventories
for the year 2,271 2,570
Average total assets 44,595 37,921
Average common
stockholders’ equity 22,636 14,556
Average current liabilities 13,355 8,772
Average total liabilities 21,960 23,466
Total assets 48,671 39,848
Total liabilities 23,872 23,044
Income taxes 2,040 2,100
Interest expense 355 397
Net cash provided by
operating activities 8,186 6,796
Capital expenditures 1,993 2,128
Cash dividends 3,800 2,732
Collapse question part
(a1)
Compute the following liquidity ratios for Coca-Cola and for PepsiCo. (Round current ratio to 2 decimal places, e.g. 6.25 and all other answers to 1 decimal place, e.g. 15.1.)
Coca-Cola PepsiCo
(1) Current ratio : 1 : 1
(2) Accounts receivable turnover times times
(3) Average collection period days days
(4) Inventory turnover times times
(5) Days in inventory days days
Answer:
Please find the detailed answer in the explanation section.
Explanation:
1. Current ratio = total current assets ÷ total current liabilities
For Coca-cola: $17,551 ÷ 13,721
= 1.28
For Pepsi : $12,571 ÷ $8,756
= 1.44
2.Accounts receivable turnover times times = Net sales ÷ average (net) accounts receivable
For Coca-cola: $30,990 ÷ $3,424
= 9.1
For Pepsi : $43,232 ÷ $4,654
= 9.3
3. Average collection period days days = (Accounts Receivable ÷ Net sales ) x 365 days
For coca-cola: ($3,424 ÷ 30,990) x 365 days
=40.3 days
For pepsi: ($4,654 ÷ $43,232) x 365 days
= 39.3 days
4. Inventory turnover times = Sales ÷ Inventory
For Coca-cola: $30,990 ÷ $2,271
=13.6
For Pepsi: $43,232 ÷ $2,570
=16.8
5.Days in inventory days = (Average Inventory ÷ Cost of sales) x 365 days
For Coca-cola: ($2,271 ÷ $11,088 ) x365 days
=74.8 days
For Pepsi: ($2,570 ÷ $20,099 ) x365 days
=46.7days
Leona Figueroa is a new employee in the payroll department of Octolium Computers. After working at the company for one week, she asks you why it is so important to submit new hire documentation. What guidance will you offer her
Answer:
The hiring documents of an employee are very important because they allow to legalize and consider as approved the function or work that a worker is going to perform.
Explanation:
The new employee recruitment documentation allows us to check if it is really possible to carry out the hiring for that the documents must be complete as for example there must be a support of the identity document of the employee, a support of the social security as well as the number of affiliation, and a home support. After verification and compliance with these requirements, we proceed to contract.
In the short-run aggregate demand and supply model, one important difference between monetary and fiscal policy is that monetary policy:_______.
a. influences aggregate supply but fiscal policy influences aggregate demand.
b. has shorter lags than fiscal policy, so monetary policy may impact the economy more quickly than fiscal policy.
c. influences aggregate demand but fiscal policy influences aggregate supply.
d. has longer lags than fiscal policy, so fiscal policy may impact the economy more quickly than monetary policy.
Answer:
a. influences aggregate supply but fiscal policy influences aggregate demand.
Explanation:
Remember, when the term monetary policy is used it refers to policies that are focused on the interest rates as well as the inflation rate, which certainly affects the money supply specifically. However, the fiscal policy is usually channelled towards aggregate demand of the economy.
Thus, it is right to say that one important difference between monetary and fiscal policy is that monetary policy affects aggregate supply but fiscal policy influences aggregate demand.
An advance payment of $1,000 for services was received on December 1 and was recorded as a liability. By the end of the year, $400 has been earned. What is the correct adjusting entry that should be include?
Answer:
The answer is "$400"
Explanation:
Given:
advance payment = $ 1,000
by the end of year he earned= $ 400
So, the total eared value is $ 400 because it is the Debit unearned income.
Answer:
Debit unearned revenues for $400
Explanation:
Adjusting entries are journal entries made to record revenues and expenses accounts. These entries are made at the end of an accounting cycle.
Payment received for services on December 1 that was recorded as a liability = $1,000
Amount earned by the end of the year = $400
Therefore,
adjusting entry: Debit unearned revenues for $400 so that expenses matched to the accounting period in which the revenue paying for them is earned.
Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $102,990, including freight and installation. Henrie’s estimated the new machine would increase the company’s cash inflows, net of expenses, by $30,000 per year. The machine would have a five-year useful life and no salvage value.
Required:
a. Compute the machine's internal rate of return to the nearest whole percent.
b. Compute the machine's net present value. Use a discount rate of 16%. (Any cash outflows should be indicated by a minus sign. Round discount factor(s) to 3 decimal places.)
c. Suppose that the new machine would increase the company's annual cash inflows, net of expenses, by only $41,000 per year. Under these conditions, compute the internal rate of return to the nearest whole percent.
Answer:
A. 14%
B. NPV = $-4,761.19
C. 28%
Explanation:
The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
IRR can be calculated using a financial calculator:
Cash flow in year 0 = $-102,990
Cash flow each year from year one to five = $30,000
IRR = 14%
The net present value is the present value of after tax cash flows from an investment less the amount invested.
Npv can be calculated using a financial calculator:
Cash flow in year 0 = $-102,990
Cash flow each year from year one to five = $30,000
I = 16%
NPV = $-4,761.19
IRR if cash flow is $41,000
Cash flow in year 0 = $-102,990
Cash flow each year from year one to five = $41,000
IRR = 28%
To find the NPV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
To find the IRR using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
I hope my answer helps you
Consider the following scenario:
Suppose that a chicken farm uses a nearby stream to dispose of the wastes released by its chickens. These wastes flow downstream into a lake that has become thick with algae and polluted due to the minerals in the waste matter. The local office of a nonprofit environmental organization successfully lobbies state regulators to stop the farm's pollution.
1. Which of the following types of private solutions to the externality of pollution has occurred in this case?
Integration of different types of businesses
Contracts
Moral codes and social sanctions
Charities
2. It's important to note that sometimes private solutions to externalities do not work. For example, this occurs when communications barriers or social customs are important enough relative to the potential gains involved that -------.
Answer: 1. Charities
2. Government action the only viable solution
Explanation:
Externalities are the resultant additional effects that are experienced by others as a result of actions by an economic agent who does not bear the extra aformentioned cost or benefit that their actions bring about.
1. Private Solutions to Externalities include any solution independent of the government.
The above Private Solution is Charities because it was a Non-profit Environmental Organization that dealt with the lobbying for the reduction to be acted upon by state agents. These types of organisations are usually Charities.
2. If it is shown that the potential gains are viewed to be quite high as in this case then negotiating with the polluters might not work. In this case Government Intervention is needed to force the polluters to adhere to rules and regulations.
In 2001, President George W. Bush and Federal Reserve Chairman Alan Greenspan were both concerned about a sluggish U.S. economy. They also were concerned about the large U.S. trade balance deficit. To help stimulate the economy, President Bush proposed a tax cut. What are the effects of the proposed policy using the IS-LM model
Answer:
The answer is given below.
Explanation:
The effect of this tax cut would be a resultant shift in the IS curve to the right, resulting in higher interest rates, currency appreciation, and bigger current account deficits. The tax cut would encourage consumers to spend more and, thereby increasing planned expenditure. The tax cut raises both income and the interest rate.
The Callie Company has provided the following information: Operating expenses were $244,000; Cost of goods sold was $378,000; Net sales were $940,000; Interest expense was $47,000; Gain on sale of a building was $84,000; Income tax expense was $142,000. What was Callie's gross profit
Answer:
Callie's Gross Profit is $562000
Explanation:
Gross profit is the profit earned by a business after deducting the costs associated with producing or selling its goods (for manufacturing and trading businesses) or the costs associated with providing the services (for service businesses) from the net revenue.
It is the profit from the trading section of the business before deducting the operating and financing expenses of the business and before adding any other income.
The gross profit is simply calculated as follows,
Gross Profit = Net Revenue - Cost of Goods Sold
Callie's gross profit = 940000 - 378000
Callie's Gross Profit = 562000
Causwell Company began 2018 with 11,000 units of inventory on hand. The cost of each unit was $4.00. During 2018 an additional 35,000 units were purchased at a single unit cost, and 21,000 units remained on hand at the end of 2018 (25,000 units therefore were sold during 2018). Causwell uses a periodic inventory system. Cost of goods sold for 2018, applying the average cost method, is $108,750. The company is interested in determining what cost of goods sold would have been if the FIFO or LIFO methods were used. Required: 1. Determine the cost of goods sold for 2018 using the FIFO method. [Hint: Determine the cost per unit of 2018 purchases.] 2. Determine the cost of goods sold for 2018 using the LIFO method.
Answer and Explanation:
For computing the cost of goods sold under two method first we have to determine the cost per unit which is shown below:
The average cost per unit is
= $108,750 ÷ 25,000 units
= $4.35
Now the cost per unit is
Total cost (11,000 units + 35,000 units) × $4.35 $200,100
Beginning units (11,000 units × $4) $44,000
The Remaining cost for 35000 units ($200,100 - $44,000) $156,100
Divide by Purchase cost per unit of 35000 units $4.46
Now the cost of goods sold are as follows
1. Under the FIFO method
Beginning 11,000 × $4.00 $44,000
Purchased 14,000 × $4.46 $62,440
Total 25,000 $1,06,440
2. Under the LIFO method
Purchased 25,000 × $4.46 $1,11,500
The risk-free rate of interest, kRF, is 6 percent. The overall stock market has an expected return of 12 percent. Nutshell, Inc. has a beta of 1.2. What is the required return of Nutshell, Inc. stock? *
Answer:required return of Nutshell, Inc. stock = 13.2%
Explanation:The Required return also called Hurdle rate is the minimum return in percentage which an investor should receive from doing business or investing in a business to compensate for the risks associated with the business. The more risky the investment, the more high returns and the less risky investment, the lower the returns.
Required Rate of Return = Risk Free Rate + Beta x (Whole Market Return – Risk Free Rate)
given
risk-free rate = 6%
market return= 12 %
beta = 1.2
Required Rate of Return = Risk Free Rate + Beta * (Whole Market Return – Risk Free Rate
= 6% + 1.2 x (12% - 6%) = 6% + 1.2 x 6% = 0.06 + 1.2x 0.06= 0.06 + 0.072=0.132 x 100 = 13.2%
Torres Company uses the gross method and a perpetual inventory system. Assuming the following entries, compute the amount that Torres Company received on May 12.
a. May 1 Sold goods costing $3,000 to Campbell Company on account, $5,000, terms 1/10, n/30. The goods are shipped FOB Shipping Point, Freight Prepaid by Seller, $110.
b. May 7 Campbell Company returned undamaged merchandise previously purchased on account, $200.
c. May 12 Received the amount due from Campbell Company.
Answer:
Torres Company received $4,800 on May 12.
Explanation:
When The Sale was made, the following entries apply :
J1
Trade Receivable $5,000 (debit)
Sales Revenue $5,000 (credit)
J2
Cost of Sales $3,000 (debit)
Merchandise $3,000 (credit)
J3
Freight Expenses $110 (debit)
Cash $110 (credit)
When Campbell Company returned Merchandise :
J1
Sales Revenue $200 (debit)
Trade Receivable $200 (credit)
When Campbell Company pays for the goods
The payment is made 2 days out of the discount period, therefore not eligible for discount.
Settle amount in full less Return Allowance of $200
Trade Receivable $4,800 (debit)
Cash $4,800 (credit)
Conclusion :
Torres Company received $4,800 on May 12.
A person has a poor credit score due mainly to the amount of debt on credit card and instalment loans. How could the person improve his score.
Answer: The answer is provided below
Explanation:
The credit score is a number used by lenders to help them decide the likelihood of an individual to repay on time if the person is granted a credit card or a loan. The higher the scores, the likelihood that the person qualifies for credit cards and loans.
A person that has a poor credit score due to the amount of debt on credit card and instalment loans can improve his or her score by paying off the debt. When an individual pays of his or her debt, the person will have an improved credit score which can be used to apply for further loans.
Furthermore, such individual can also keep his or her balances low on the credit cards. A credit card with high debts doesn't represent the individual well when applying for a loan which will lead to a negative credit score.
Is it reasonable to expect that managers can measure their social and environmental performance on the same level as they measure their financial performance with a triple bottom line?
Answer:
The correct answer is: No, it is not reasonable to expect that managers can measure their social and environmental performance on the same level as they measure their financial performance.
Explanation:
To begin with, the concept known as triple bottom line refers exactly to the measuring of the the financial, social and environemental performances from part of an organization. However, it is not posible to measure them in the same way, due to the fact that they are very different terms with different factors. Therefore that in order to measure one of them there will be an unique way of doing it that can not be copy in order to measure the other. That is why if the organization want to measure the financial performance it will look into the numbers but with the social or environmental performance it can not do that.
Elaborate on any three internal factors of Jessops’ Group Limited that can influence its functioning
Answer:
The internal factors are factors that are under the control of the company and these can be tangible or intangible in nature.
Explanation:
Examples of three internal factors of Jessops’ Group Limited that can influence its functioning are:
1. Assets of the company: the company has over 200 stores around the UK, and also has an online shop and call center. This will make the company to serve a wide base of customers which can increase the revenue of the UK’s premier photographic retailer.
2. Photo and imaging business: This is a business line which is a key part of the company's product portfolio. The decision of the company to focus its attention on making its imaging business the market leader is because of the stability in its margins during the 2008–09 economic recession in the UK.
3. Participation and investment in social responsibility: The response of the company to the Waste Electrical and Electronic Equipment (WEEE) regulations on the disposal of electronic goods at the end of their life by contributing towards a national fund to assist local councils to develop collection facilities for electronic goods is an example of social responsibility. The creation of a convenient battery recycling points in its stores and effort to increase awareness of the WEEE regulations are part of social responsibility functions that will be seen more favorably by consumers. This can therefore increase the sales of the company.
The market and Stock J have the following probability distributions: Probability rM rJ 0.3 15% 20% 0.4 9 5 0.3 18 12 a. Calculate the expected rates of return for the market and Stock J. b. Calculate the standard deviations for the market and Stock J.
Answer: The answer is provided below
Explanation:
The expected rates of return for the market = 13.5
the expected rates of return for the market and Stock J = 11.6
The standard deviations for the market = 3.85
The standard deviations for Stock J = 6.22
The explanation has been attached.
Your company currently has $ 1 comma 000 par, 6 % coupon bonds with 10 years to maturity and a price of $ 1 comma 078. If you want to issue new 10-year coupon bonds at par, what coupon rate do you need to set? Assume that for both bonds, the next coupon payment is due in exactly six months.
Answer:
The next coupon rate that is needed to set is 5.00%
Explanation:
Solution
Recall that:
Your company presently has =$1,000 par
Coupon bonds = 6%
Maturity = 10 years
The next step is to find the coupon rate that is needed or required to set.
Now,
The number of semi annuals to maturity, NPER = (10 YEARS * 2)= 20
Semiannual coupon payments, PMT = ($1000 * 6%/2) = $30
The current selling price per bond (FV) = $1078
The maturity value at the end is = $1000
The semiannual compound type, = 0 (It is 0 if compounded at the end of each semiannual and is 1 if compounded at the start of each semiannual)
Semi annual interest rate is = 2.5%
Thus,
The number of semi annuals in a year is = 2
The annual coupon rate of bonds (new) = 2/50 % * 2
= 5.00%
It is important to note that the semi annual coupon rate is computed suing the excel function rate (nper, pmt, pv, fv, type),
Whereby
PV =1078
NPR = 20
PMT =30
FV = 1000
TYPE = 0.
Synovec Corporation is expected to pay the following dividends over the next four years: $6.20, $17.20, $22.20, and $4.00. Afterward, the company pledges to maintain a constant 5.5 percent growth rate in dividends forever. If the required return on the stock is 9 percent, what is the current share price
Answer:
Current price =$125.56
Explanation:
According to the dividend valuation model, the value of a share is the present value(PV) of its future expected dividend discounted at the required rate of return.
We will sum the PV of its future dividends as follows:
PV in year 1 = 6.20 × 1.09^(-1)= 5.69
PV in year 2 = 17.20 × 1.09^(-2)= 14.48
PV in year 3 = 22.20 × 1,09^(-3)=17.14
PV in year 4 = 4 × 1.09^(-4)= 2.83
PV in year 5 and beyond = (4 × 1.055)/(0.09-0.055) ×1.09^(-4) = 85.42
Current price = 5.69 + 14.48 + 17.14 + 2.83 + 85.42 = 125.56
Current price =$125.56
