Answer:
3.1% / 0.031
16
Explanation:
dividend yield = dividend per share / share price
$2.50 / $80 = 0.031 = 3.1%
Payout ratio = dividend per share / earning per share = 50% = 0.5
$2.5 / earning per share = 0.5
earning per share = $2.5 / 0.5 = $5
P / E = Stock price / earning per share = $80 / $5 = 16
A recession is usually declared to be over when short-run output returns to potential output.A. TrueB. False
Answer:
False
Explanation:
A recession is a period of general decline in economic activities. It is when the GDP of a country for two consecutive quarters is negative.
Potential output is the output an economy can produce if all its resources are fully employed.
During a recession, output is negative so output would be less than potential output.
Accounting data are used analyze cash flows, and this analysis is critical for decision making. Consider the following case: J&H corp recently hired Jeffery. His immediate mandate was analyze the company. He has to submit a report on the company's operational efficiency and estimate potential investment in working capital. He has the income statement from last year and the following information from the company's financial reports as well as some industry averages. Last year, J&H Corp. Reported a book value of $700 million in current assets, of which 35% is cash, 37% si short-beam investments, and the rest is accounts receivable and inventory. The company reported $595.0 million of current liabilities including accounts payable and accruals. Interestingly, the company had no notes payable claims last year. There were no changes in the accounts payable during the reporting period. The company, however, invested heavily in plant and equipment to support its operations. It reported a book value of $1,120 million in long-term assets last year. Based on the information given to Jeffery, he submits a report on January 1 with some important calculations for management to use, both for analysis and to devise an action plan.
Which of the following statements in his report are true?
a. J&H Corp.'s net operating working capital is $105.0 million.
b. J&H corp.'s NOPAT is $336.0 million, which is lower than the industry average of $420.0 million
c. J&H Corp.'s total net operating capital consists of its net operating working capital and total investment in long-term assets.
d. The company has no notes payable reported in its balancesheet, so all its current are its operating liabilities.
e. J&H Corp. has-$154.0 million of non-interest bearing current assets net of non-interest charging liabilities.
Answer:
a. J&H Corp.'s net operating working capital is $105.0 million.
d. The company has no notes payable reported in its balance sheet, so all its current are its operating liabilities.
Explanation:
cash $245
short term investments $259
accounts receivable and inventory $196
total current assets = $700
long term assets = $1,120
total assets = $1,820
total liabilities = $595
total equity = $1,225
options:
a) net operating working capital = current assets - current liabilities = $700 - $595 = $105
b) there is no information about the company's profits or the average profits for other companies in the same industry (SO OPTION B IS WRONG)
c) net operating capital = current assets - current liabilities (SO OPTION C IS WRONG)
d) correct, since the company doesn't have any long term liabilities, all of its liabilities must be current or operating liabilities
e) there is no way to determine this from the information provided (SO OPTION E IS WRONG)
Anderson's theory of skill development distinguishes between declarative and procedural knowledge. Procedural knowledge refers knowing how to do something. What is declarative knowledge? a. Factual knowledge about a task b. Automatic task processing. c. Associative knowledge of the task. d. Muscle memory
Answer:
a. Factual knowledge about a task
Explanation:
Anderson's theory distinguishes between two theories. The procedural theory and the declarative theory. While the procedural theory is basically knowledge on how to do something, the declarative knowledge theory is the knowledge about facts. It is the basic knowledge or facts about things that are stored in the memory. It is static in nature. It is knowledge about something, a process or a place or task which is already processed and stored in the memory.
Consider the following two countries. Assume they produce only these two goods. Note that productivity is now measured in how many goods can be produced per hour, the opposite of how we measured. U.S. Japan Cars 12 10
Computers 4 6A. What is U.S’ opportunity cost of making cars?
B. What is Japan’s opportunity cost of making cars?
Answer:
A. 1/3 computers
B. 0.6 computers
Explanation:
A. The opportunity cost incurred by the US to make cars is the number of computers it would have to give up to make a car.
The US can either make 12 cars or 4 computers. For every car made therefore the US forgoes;
= 4/12
= 1/3 computers.
B. The same logic applies to Japan. They can either make 10 cars or 6 computers.
Their opportunity cost for cars is therefore;
= 6/10
= 0.6 computers
Productivity is expressed as:________ A. output plus input B. output minus input C. output times input D. output divided by input E. input divided by output
Answer:
D. Output divided by input
Explanation:
Productivity refers to how factors of production such as rent , land, labor and capital are combined efficiently to produce certain output in an economy. It is usually measured as output ratio divided by input ratio.
In other words, productivity means output gotten as a result of inputs added or given. For example, if 10 oranges are used to produce 3 litres of orange juice, then the productivity is the 3 litres of orange juice. However, if same number of oranges is used to produce say 4 litres of orange juice, we can safely say that the person who produces 4 litres of orange juice is more productive.
We can see here that productivity is expressed as: D. output divided by input
What is Productivity?Productivity is a measure of the efficiency or output of a process, system, or individual in relation to the inputs or resources used. It quantifies the relationship between the amount of output produced and the resources, such as labor, capital, time, or materials, that were required to produce that output.
Productivity can be measured in various ways depending on the context. For example, labor productivity measures the output per worker or per hour worked, while total factor productivity considers the combined contributions of multiple inputs, such as labor and capital.
The formula for productivity is:
Productivity = Output / Input
Therefore, option D. "output divided by input," correctly represents how productivity is expressed.
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Tadashi's uncle passed away and left him a Realty Experts franchise. Tadashi is not a licensed agent or broker, nor does he know the first thing about the real estate business. He plans to sell his Realty Experts franchise to his friend Devonte, who recently got his real estate license. One of the advantages of owning a franchise is that you can decide to sell out to anyone you think is suitable for the business.
a. True
b. False
Answer:
b. False
Explanation:
Since in the question it is mentioned that Uncle has passed away and the franchise of realty experts had left him also tadashi is not a license agent or broker or neither he had any idea related to the real estate business so he decided to sell this franchise to his friend Devenote who has already license
So as per the given situation, it should not be sold as the permission is required from the parent company to sell off this franchise
Therefore the given statement is false
Indicate the effects of the following business transactions on the accounting equation for Sam's Snack Foods, a supplier of snack foods.
Transaction (a) is answered as a guide. a. Sam s Snack Foods received cash from the issuance of common stock to stockholders. Answer: Increase asset (Cash); Increase equity (Common Stock)
b. Cash purchase of land for a building site.
c. Paid cash on accounts payable.
d. Purchased equipment; signed a note payable.
e. Performed service for a customer on account.
f. Employees worked for the week but will be paid next Tuesday.
g. Received cash from a customer on accounts receivable.
h. Borrowed money from the bank.
i. Cash dividends paid to stockholders.
j. Incurred utilities expense on account.
Answer:
a. Sam s Snack Foods received cash from the issuance of common stock to stockholders.
Increase asset (Cash); Increase equity (Common Stock)b. Cash purchase of land for a building site.
Decrease current asset (Cash); Increase non-current asset (Land)c. Paid cash on accounts payable.
Decrease asset (Cash); Decrease liabilities (Accounts payable)d. Purchased equipment; signed a note payable.
Increase non-current asset (Equipment); Increase long term liabilities (Notes payable)e. Performed service for a customer on account.
Increase asset (Accounts receivable); Increase equity (Retained earnings)f. Employees worked for the week but will be paid next Tuesday.
Increase liabilities (Wages payable); Decrease equity (Retained earnings)g. Received cash from a customer on accounts receivable.
Increase asset (Cash); Decrease asset (Accounts receivable)h. Borrowed money from the bank.
Increase asset (Cash); Increase liability (Notes payable)i. Cash dividends paid to stockholders.
Decrease asset (Cash); Decrease equity (Retained earnings)j. Incurred utilities expense on account.
Increase liabilities (Accounts payable); Decrease equity (Retained earnings)In your company's management development program, there was a heated discussion between
some people who claimed, "Theory is impractical and thus no good," and others who claimed,
"Good theory is the most practical approach to problems." What position would you take and
why?
Answer:
The most sensible position is to understand that theory, while not practical in itself, can be immensely helpful when dealing with pratical matters.
This is because theory gives you a sound conceptual foundation that can be used to analyze the practical context, and approach it with the best possible practical solutions.
Without theory, managers have to rely too much on intuition, which can often fail.
Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $3,900 and sell its old washer for $1,200. The new washer will last for 6 years and save $1,100 a year in expenses. The opportunity cost of capital is 19%, and the firm’s tax rate is 21%.
a. If the firm uses straight-line depreciation over a 6-year life, what are the cash flows of the project in years 0 to 6? The new washer will have zero salvage value after 6 years, and the old washer is fully depreciated. (Negative amounts should be indicated by a minus sign.)
b. What is project NPV? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
c. What is NPV if the firm investment is entitled to immediate 100% bonus depreciation? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
Cashflow
Yearo zero ($2,700)
from 1st to 6th: +$1,005.5
Net Present Value: $728.53
If bonus depreciation then:
Net Present Value: $916.04
Explanation:
Cash Flow
Year zero:
-3,900 purchase of new machine
+ 1,200 sale from old machine
-2,700
Years 1 through 6:
1,100 savings x (1 - 21% tax rate) = 869.0
depreciation
3,900 / 6 = 650
tax-shield on depreciation: 650 x 21% = 136.5
total cash-flow:
869 cost savings + 136.5 lesser taxes = 1005.5
We now solve for the Net present value we discount the cashflow at 19% which is the cost of capital and compare agaisn the year zero outflow:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 1,005.50
time 6
rate 0.19
[tex]1005.5 \times \frac{1-(1+0.19)^{-6} }{0.19} = PV\\[/tex]
PV $3,428.5310
- $2,700 + $3,428.53 = $728.53
If bonus depreciation scenario:
at year 1 the entire equipment is depreciate
giving a tax shield of:
3,700 x 21%= 777
This will be discounted one year as the depreciation bonus which lowers taxes occurs at year-end:
777 / 1.19 = 652.94117647
Then, we solve for the present value of the cost savings only as the depreciations do not occur:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 869.00
time 6
rate 0.19
[tex]869 \times \frac{1-(1+0.19)^{-6} }{0.19} = PV\\[/tex]
PV $2,963.0964
So we have:
- 2,700 year zero cash outflow
+ 652.94 present value of bonus depreciation
+ 2,963.10 present value of the cost savings
916.04 net present value
To avoid accepting projects that actually should be rejected, a company should ignore intangible benefits in calculating net present value.
a. True
b. False
Answer:
false
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable.
Monetary amounts should be allocated to intangible benefits and incorporated into the calculation of NPV
How would you value a 1000 bond with 10% coupon rate?
Question
How would you value a 1000 bond with 10% coupon rate?
Assuming the bonds is repayable in five (5) years time with a yield of 11% per annum.
Answer:
Value of bond = $948.54
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
The value of bond of the can be worked out as follows:
Step 1
PV of interest payments
Annul interest payment = 10% × 1000 = 100
Annual yield = 11%
Total period to maturity (in years) = 8 years
PV of interest =
100 × (1- 1.11^(-8)/)/ 0.11 = 514.612
Step 2
PV of Redemption Value
= 1,000 × (1.11)^(-8) = 433.926
Step 3
Price of bond
= 514.612 + 433.926 = 948.539
Value of bond = $948.54
Smoking cigarettes is a leading cause of many diseases. Suppose the government has opened several public clinics that treat smoking-related diseases and is trying to decide how to fund these clinics. One suggestion is to raise the funds for the public clinics by imposing a tax on yachts. This tax follows:
Answer:
The ability-to-pay principle
Explanation:
Choose the correct term for each of the following descriptions.
A. Expenditure on research and development.
B. A bank loan.
C. Listed on a stock exchange.
D. Has limited liability.
E. Responsible for bank relationships.
F. Agency cost.
Explanation:
A. Expenditure on research and development. > Investment decision.
Reasearch and development (R&D) is an investment cost because the results of such research can benefit the company long-term.
B. A bank loan. > Financial asset.
A bank loan involves cash, and could be rightly called a financial asset.
C. Listed on a stock exchange. > Public corporation.
Only public corporations are listed on stock exchange, an example is Microsoft.
D. Has limited liability. > Corporation
E. Responsible for bank relationships. > The Treasurer.
F. Agency cost. > Agency cost
Which of the following are correct descriptions of large corporations? a) Managers no langer have the incentive to act in their own interests. b) The corporation survives even f managers are dismissed c) Shareholders can sell their holdings without disrupting the business d) Corporations, unlike sole proprietorships, do not pay tax: instead, shareholders are taxed on any dividends they receive.
Answer:
b) The corporation survives even if managers are dismissed.
c) Shareholders can sell their holdings without disrupting the business.
Explanation:
The above statements are correct descriptions of large corporations if consider;
1. A corporation is viewed as a legal entity, and so is believed to exist (survive) even if those who manage the corporation are dismissed.
2. Put simply, a shareholder holds some owns certain decision rights of a corporation, thus, the shareholder can decide to sell their holdings to an interested party. However, the business would not be disrupted, as only the holdings of a particular shareholder were sold, and the new shareholder would normally want the best interest of the company that's why he made the deal.
The government must mandate lower prices when beef surpluses exist; otherwise, the quantity supplied will continue to exceed the quantity demandedA. TrueB. False
Answer: True
Explanation:
Beef surplus in the market simply means that there's excess of beef in the market. In this case, the quantity supplied for beef is more than the quantity that the consumers demand, which means that the price at which beef is sold is more than the equilibrium price.
Due to thus reason, the government must mandate lower prices as this will help in increasing the quantity demanded of beef, reduce quantity supplied and hence, the surplus will be curtailed.
In the EOQ model, the average inventory per cycle over many cycles is Q/2. A. True B. False
Answer:
A. True
Explanation:
An organization would usually measure the volume of its orders in order to meet up with demand while also making sure that the cost per order is maintained at the nearest minimum. The tool used to measure the volume of frequent orders is Economic order quantity(EOQ) .
When inventories are ordered, there will be continuous movement of inventory say from Q(order amount) to zero. This means that the average inventory is Q ÷ 2. Also, the inventory costs for each period is the same as average cost(Q/2) multiply by length of the period.
Fill in the blanks to complete the sentence about the law of increasing opportunity cost. Drag word(s) below to fill in the blank(s) in the passage. According to the law of increasing opportunity cost, as a society______more and more of a certain good, further production_______ involve ever-greater opportunity costs, so that producing the good is associated with greater and greater________
Answer and Explanation:
The law of increasing opportunity cost refers to the law in which the way of increasing the opportunity cost described at that case when there are applied resources
Now
If the cost of opportunity rises as per the law, the society produced more and more goods i.e. certain further the production rises and also involved the ever greater cost of opportunity with greater and greater trade offs or opportunity cost
A new client of yours is age 25, with limited investing experience. You have guided him when making his initial investments based on his investment objectives, risk tolerance, financial resources and financial needs. He has just returned from a long vacation, where he tells you that while on the airplanes, he has read 2 investing books and now wants to manage his account without your input. This is an example of:
Answer: Overconfidence
Explanation:
Becoming an Investment advisor is no easy feat. In most cases one would have to go through rigorous training in college after which they will probably have to get additional certification which may require more training.
All this is done to ensure that the client's money is as safe as possible in the hands of the investment advisor while they attempt to grow it. To think that after reading just 2 books on investing, one can become so good that they can manage their own investment is simply overconfidence.
Even if they were blessed with an IQ higher than Einstein, 2 books is not enough to get the requisite knowledge required. If being an investment advisor was so easy, more people would be allowed to do it.
Which of the following ratios use de-levered net income?
a. Financial Leverage
b. Return on Equity
c. Return on Assets
d. Asset Turnover
e. Return on Sales
Answer:
c. Return on Assets
Explanation:
The net income usually has an impact of interest expense since interest expense is deducted from earnings before interest and tax in arriving at net income.
Hence, in order to take out the impact interest expense when computing return on assets, an adjusted net income known as de-levered net income is computed using the below formula:
Net Income + (1-t)xInterestExpense
Which of the following groups would have access to managerial accounting information?a. bankers.
b. investors.
c. competitors of the business.
d. managers.
Answer:
D
Explanation:
Those that have access to managerial accounting information are known as internal users of accounting information. They include :
managers owneremployeesThose that do not have access to managerial accounting information are known as external users of accounting information. They include :
a. bankers.
b. investors.
c. regulatory bodies
At which stage of defining requirements are tools for analyzing strengths, weaknesses, opportunities, and threats useful?
Answer: Interview and observe staff
Explanation:
At the interview and observe staff stage of defining requirements, the tools for analyzing strengths, weaknesses, opportunities, and threats are useful.
It should be noted that the strengths, weaknesses, opportunities, and threats which is usually referred to as SWOT analysis is simply a framework used to assessing potential and also developing strategies that'll be useful to tackle a specific problem.
The primary goal of a financial manager of a corporation is:______.
a. maximize market share.
b. maximize the owner's wealth.
c. increase sales and profit.
d. have healthy cash flow.
Answer:
B
Explanation:
Direct incentives are designed to induce changes in behavior. Indirect incentives change behavior in ways that were not intended. Identify each item as an example of a direct or an indirect incentive.a. Car alarms to discourage break-ins b. Raising corporate income tax rates leads to fewer new businesses c. Frequent-flier points to increase customer loyalty d. Government-funded debt relief for college graduates leads to more student-loan debt
Answer and Explanation:
The Direct incentive is the incentive that has an instant impact on the users of the resources and the returns to the investments are directly influenced
On the other hand, the indirect incentives have an indirect impact for changing overall conditions of the framework
Therefore the categorization is as follows
For direct incentive
1. car alarms
2. Frequent filter points
For indirect incentive
1. raising corporate income
2.Government-funded debt
The following information should be relevant:
The Direct incentive refers to the incentive that has an instant effect on the users of the resources and the returns to the investments are directly impacted. While On the other hand, the indirect incentives have an indirect impact for changing total framework conditions
So, the categorization is as follows
For direct incentive
1. car alarms
2. Frequent filter points
For indirect incentive
1. raising corporate income
2.Government-funded debt
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What is the difference between brainwashing and an argument?
Answer:
In essence, brainwashing is when you want and have a steong will to make someone believe what you believe and you think its the only way they can believe. Ann argument, on the other hand, is and shoukd be based off of facts and not false statements.
The difference between brainwashing and an argument is brainwashing involves manipulating someone with facts and information whereas an argument involves conversation to prove your point.
What causes an argument?
When situations when two individuals involved in a conversation share differences of opinions it causes disagreement between them and creates arguments in order to prove them stronger.
The terms brain washing means manipulating someone by giving information and influencing them with your point of view so they will also perform an action in the way in which you want them to do.
In manipulation, the new information is introduced with a lack of reasoning whereas in an argument there is the presence of information and data where individuals put their opinions based on their understanding.
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Dellroy Rentals Company faced the following situations. Journalize the adjusting entry needed at December 31, 2016, for each situations. Consider each fact seperately.
a. The business has interest expense of $3,200 that it must oay early in January 2017.
b. Interest revenue of $4,100 has been earned but not yet recieved.
c. On Huky 1, 2016, when the business colected $12,000 rent in advance, it debited Cash and credited Unearned Rent Revenue. The tenant was paying gor two years' rent.
d. Salary expense is $6,100 per day--Monday through friday--and the business pays employees each friday. This year, December 31 falls on a Thursday.
e. The adjusted balance of the Supplies account is $3,200. The total cost of supplies on hand is $1,300.
f. Equipment was purcashed on January 1 of this year at a cost of $180,000. The equipment's useful life is five years. There is no residual value. Record depreciation for this year and then determine the equipments book value.
Answer:
Journal entries are given below
Equipments book value = $144,000
Explanation:
We can journalize each situation by debiting the expenses, assets, and by crediting liabilities, capital, and income given in the situation.
A. To record Interest Expense Payable in January
DEBIT CREDIT
Interest Expense $3,200
Interest Payable $3,200
b. To record Interest Revenue Earned but not Received
DEBIT CREDIT
Interest Receivable $4,100
Interest Revenue $4,100
c. To recognize Unearned Rent Revenue for the Period July to December
DEBIT CREDIT
Unearned Rent Revenue $3,000
(12,000*1/2*6/12)
Rent Revenue $3,000
d. To record Salary due for 4 days from Monday to Thursday
DEBIT CREDIT
Salary Expense $24,400
(6,100*4)
Salary Payable $24,400
e. To recognize the Supplies Expense at year end
DEBIT CREDIT
Supplies Expense $1,900
(3,200 - 1,300)
Supplies $1,900
f. To record depreciation for the current year
DEBIT CREDIT
Depreciation Expense $36,000
(180,000/5)
Accumulated Depreciation $36,000
Equipments book value = Cost of Equipment - Depreciation
Equipments book value = 180,000 - 36,000
Equipments book value = $144,000
line of customers waiting to pay. The first customer asks you for directions to the airport.
It is busy, and you are the only one on the shift. You have
What do you do?
А
Treat all customers the same. Provide the customer with quick directions even though there are others waiting in line.
B
Ask the customer to please wait a few minutes until you check out the remaining customers. Then provide the directions.
с
Ask the other customers in line if they know how to get to the airport and ask them to help the customer. This way you can focus on
checking out the remaining customers.
D
Sell the customer a map so that he can find his way to the airport,
Answer:
the answer is a
Explanation:
because all you have to do is just give them some quick directions and then move on to the rest of the customers but treat them all the same
In February, Katie Long formed KL Company Inc. Transactions for the month of March have been posted to the T accounts. An intern has prepared a trial balance from the T accounts, but there seem to be some errors.T accountsCashBal. 8,000 3/3: 2,300 3/25: 7,575 3/27: 1,300 3/28: 7,000 3/29: 3,575 3/30: 8,125 3/31: 1,875 Accounts ReceivableBal. 1,950 3/18: 10,025 3/30: 8,125 SuppliesBal. 225 3/7: 1,450 Office Equipment3/2: 19,000 Accounts Payable3/27: 1,300 Bal.: 1,250 3/7: 1,450 Notes Payable 3/2: 19,000 Common Stock Bal.: 7,500 3/28: 7,000 Retained Earnings Bal.: 1,425 Dividends3/31: 1,875 Fees Earned 3/18: 10,025 3/25: 7,575 Rent Expense3/3: 2,300 Wages Expense3/29: 3,575 Required:TransactionDescriptions of the transactions for the month of March are provided in the following table. Each of the transactions that follow has been posted to the T accounts. Referring to the T accounts, select the date on which each transaction occurred, enter the amount of the transaction, and select the account to debit and credit.
Answer:
I have attached the answer as well as the rest of the question showing the format for the table.
Looking at the T-accounts, I used the dates to match the transactions between for the accounts to be debited and those to be credited.
For instance, the 25th of March showed a debit in the cash account of $7,425, the corresponding date and figure could be found in the Fees earned account as a credit so the cash account will be debited and the fees account credited.
In February, Katie Long formed KL Company Inc. Transactions for the month of March have been posted to the T accounts. An intern has prepared a trial balance from the T accounts, but there seem to be some errors.T accountsCashBal. 8,000 3/3: 2,300 3/25: 7,575 3/27: 1,300 3/28: 7,000 3/29: 3,575 3/30: 8,125 3/31: 1,875 Accounts ReceivableBal. 1,950 3/18: 10,025 3/30: 8,125 SuppliesBal. 225 3/7: 1,450 Office Equipment3/2: 19,000 Accounts Payable3/27: 1,300 Bal.: 1,250 3/7: 1,450 Notes Payable 3/2: 19,000 Common Stock Bal.: 7,500 3/28: 7,000 Retained Earnings Bal.: 1,425 Dividends3/31: 1,875 Fees Earned 3/18: 10,025 3/25: 7,575 Rent Expense3/3: 2,300 Wages Expense3/29: 3,575 Required:TransactionsDescriptions of the transactions for the month of March are provided in the following table. Each of the transactions that follow has been posted to the T accounts. Referring to the T accounts, select the date on which each transaction occurred, enter the amount of the transaction, and select the account to debit and credit.
Complete Question
The complete question is shown on the first , second and third image
Answer:
The solution and the calculation is shown on the fourth image
Explanation:
According to the Census Bureau, in October 2016, the average house price in the United States was $354,900. In October 2000, the average price was $215,100. What was the annual increase in the price of the average house sold? (Do not round intermediate calculations)
Answer:
3.18%
Explanation:
Calculation for the annual increase in the price of the average house sold
We are suppose to use this formula FV = PV (1+r)^t but since we are looking for R the formula to use will be:
R = (FV / PV)^1/16– 1
Let note that 2016-2000 will give us 16 years
Where,
FV=$354,900
PV=$215,100
Let plug in the formula
R= ( $354,900/$215,100 )^1/8)16– 1
R=(1.6499)^1/16-1
R=1.0318-1
R=0.0318×100
R=3.18%
Therefore the annual increase in the price of the average house sold will be 3.18%
A firm has a current price of $40 a share, an expected growth rate of 11 percent and expected dividend per share (D1) of $2. Given its risk, you have a required rate of return for it of 12 percent. Your expected rate of return and investment decision is as follows:A) 10 percent do not buyB) 12 percent do not buyC) 14 percent buyD) 16 percent buyE) 18 percent buy
Answer:
D) 16 percent - buy
Explanation:
R = (D1 / P0) + g
R=Expected Return, P0=Current Market Price = $40, D1 = Expected Dividend = $2, g=Expected Growth Rate = 11% = 0.11
Expected Return = R = (2/40)+0.11
R = 0.05+0.11
R = 0.16
R = 16%
The Expected Return is higher than the required return of 12%. Hence, it should be bought (it is expected to give higher return than required)