The credit card’s EAR with 10.37% APR if the interest is charged monthly is 10.85%.APR (Annual Percentage Rate) is the total charge for a credit card expressed as a yearly interest rate.
This rate is usually charged to borrowers for the use of a credit card. Borrowers must pay an APR, which is often expressed as a percentage, to borrow money from their credit cards. EAR (Effective Annual Rate) is the interest rate charged on credit cards, accounting for the compounding of interest within that year.
This rate is the amount of interest that will be charged to the borrower annually, including any fees or charges. In other words, it is the annual interest rate on a credit card that is charged to a borrower after accounting for compounding over a year. Calculation of EAR:EAR = (1 + APR / m)^m - 1Where:EAR = Effective Annual Rate APR = Annual Percentage Rate the value of m = the number of compounding periods per year.
In the given scenario, the credit card’s APR is 10.37%, which means m = 12 because interest is charged monthly, we can calculate the EAR as follows: EAR = (1 + 10.37% / 12)^12 - 1EAR = (1 + 0.00864166667)^12 - 1EAR = (1.00864166667)^12 - 1EAR = 1.1085 - 1EAR = 0.1085 x 100%EAR = 10.85%Therefore, the credit card’s EAR with 10.37% APR if the interest is charged monthly is 10.85%.
To know more about Annual Percentage Rate refer here : brainly.com/question/13358341
#SPJ11
Most organisations use a year, rather than a week or a month, as the period over which to calculate budgeted cost-driver rates. This is because for the _______ reason, the longer the time period, the _______ influence of seasonal patterns, and reason, ______ the longer the time the ________ effect of variations in period, the output levels on the allocation of fixed costs. -______ costing may result in overpricing and competitors entering a market and taking market share for products that a company erroneously believes are low-margin or even unprofitable. _____costing may result in companies selling products on which they are in fact losing money, when they erroneously believe them to be profitable. Please answer all parts of the question.
Organizations use a year as the period for budgeted cost-driver rates to minimize the influence of seasonal patterns and variations in output levels on fixed cost allocation. Activity-based costing prevents pricing and profitability errors that traditional costing methods may lead to.
Most organizations use a year, rather than a week or a month, as the period over which to calculate budgeted cost-driver rates. This is because for the first reason, the longer the time period, the less influence of seasonal patterns, and thus the longer the time, the less effect of variations in output levels on the allocation of fixed costs. Activity-based costing may result in overpricing and competitors entering a market and taking market share for products that a company erroneously believes are low-margin or even unprofitable. Traditional costing may result in companies selling products on which they are in fact losing money when they erroneously believe them to be profitable.
learn more about "Organizations ":- https://brainly.com/question/25922351
#SPJ11
What is the economic trade-off of avoidance? How about the other treatments: Passive retention, retention with management, transfer by non-insurance contract and transfer by insurance?
In economics, trade-off avoidance is a critical idea. It refers to a scenario where one must choose between two options. By selecting one option, you will be forced to abandon the other. Avoidance, in this case, implies that you are foregoing the advantages of one alternative while taking the benefits of another.
Such an approach necessitates considerable cost in the short term, such as the implementation of workplace safety measures or the improvement of inventory management. However, by doing so, a company can save money in the long term by lowering the incidence of loss events, lowering insurance premiums, and maintaining a strong reputation.
Transfer by non-insurance contract entails a situation where risks are shifted to another entity through legal arrangements such as contracts. This form of transfer carries with it the disadvantage of requiring the provision of a considerable amount of collateral and a lack of flexibility. The high cost of obtaining collateral may make this transfer method unaffordable for many companies.
Finally, transfer by insurance involves the transfer of risk to an insurance provider. This approach enables a company to transfer its exposure to loss to an insurance provider who will then pay for any losses incurred. The disadvantage of this method is that it may result in higher premiums and a loss of control over the claims management process.
To know more about alternative visit :
https://brainly.com/question/32808807
#SPJ11
1. Why is mobility important to business?
2. What does each area of an EMM cover and why is it important to your business?
3. What are the primary and core ERP components? Mobile device management Mobile information management Mobile application management
The primary components of an ERP system are financial, human resources, supply chain management, and customer relationship management, providing essential functionalities for businesses.
1. Mobility is important to business because it enables greater flexibility, productivity, and efficiency.
With mobility, employees can access important business information and applications from anywhere, at any time, using their mobile devices. This allows for improved collaboration, faster decision-making, and the ability to respond to customer needs more quickly. Mobility also supports remote work and enables businesses to expand their reach beyond traditional boundaries, tapping into new markets and customers.2. Each area of Enterprise Mobility Management (EMM) covers specific aspects of managing mobile devices, information, and applications within a business. Mobile Device Management (MDM) focuses on controlling and securing mobile devices used by employees, ensuring compliance with company policies and protecting sensitive data.
Mobile Information Management (MIM) involves managing the flow of information on mobile devices, including data encryption, access controls, and data loss prevention. Mobile Application Management (MAM) involves managing the lifecycle of mobile applications, from distribution and updates to monitoring and security.These areas are important to businesses because they provide a comprehensive approach to managing the mobile ecosystem within an organization. By effectively managing devices, information, and applications, businesses can enhance security, streamline workflows, and ensure compliance with regulations.3. The primary components of Enterprise Resource Planning (ERP) systems are typically categorized as financial, human resources, supply chain management, and customer relationship management. These core components form the foundation of an ERP system and cover essential business functions.
Financial components manage accounting, budgeting, financial reporting, and financial analysis. They help businesses track revenue, expenses, and financial performance.Human resources components handle employee data, payroll, benefits, recruitment, training, and performance management. They enable efficient HR processes and support workforce planning and management.Supply chain management components manage procurement, inventory, order fulfillment, logistics, and demand planning. They help optimize the supply chain, reduce costs, and improve efficiency.Customer relationship management components focus on managing customer interactions, sales, marketing, and service. They support customer engagement, lead management, and customer service.In summary, the primary components of ERP systems include financial, human resources, supply chain management, and customer relationship management. These components are essential for businesses to efficiently manage their financials, workforce, supply chain, and customer interactions.Learn more About ERP from the given link
https://brainly.com/question/14635097
#SPJ11
Gary Scott can buy a box of 40 Blu-ray discs for $18.99 and a box of 40 jewel cases for $9.98. Alternatively, he can purchase two boxes of 20 Blu-ray discs already in jewel cases for $16.95 each. Which is the better buy, and by how much - the box of 40 Blu-ray discs and a box of 40 cases or the two boxes of 20 Blu-ray discs with jewel cases included?
Gary Scott can buy a box of 40 Blu-ray discs for $18.99 and a box of 40 jewel cases for $9.98.
Alternatively, he can purchase two boxes of 20 Blu-ray discs already in jewel cases for $16.95 each. To figure out which is the better buy, we need to find out the cost of the two alternatives and then compare them.
Cost of buying a box of 40 Blu-ray discs and a box of 40 cases = $18.99 + $9.98 = $28.97Cost of buying two boxes of 20 Blu-ray discs already in jewel cases = 2 x $16.95 = $33.90Clearly, the first alternative is the better buy, as it is cheaper by $4.93.The cost of the second option is $33.90 which is greater than the cost of the first option, $28.97. Hence, the better option is the first one which is a box of 40 Blu-ray discs and a box of 40 cases. It saves $4.93.
To know more about box visit:
https://brainly.com/question/23951385
#SPJ11
1. Returned 20 widget product units (that were purchased on account) to the vendor who adjusted our bill
2. Sold 280 widget product units for $16 each for cash to Marsha Brady 15.
3. Sold 250 widget product units for $16 on account to Greg Brady.
4. Received $80 in advance from a customer who expects to purchase items from us in the near future .
Register every transaction in the journal Entry.
1. Return of 20 widget units: Debit Accounts Payable, Credit Vendor Adjustment.
2. Cash sale of 280 widget units to Marsha Brady: Debit Cash, Credit Sales Revenue.
3. Sale of 250 widget units on account to Greg Brady: Debit Accounts Receivable, Credit Sales Revenue.
4. Receipt of $80 in advance: Debit Cash, Credit Unearned Revenue.
1. Journal Entry: To record the return of 20 widget product units to the vendor and adjustment of the bill.
Date | Account Titles | Debit | Credit
----------------------------------------------
[Date] | Accounts Payable | $[Amount] |
| Vendor Adjustment | | $[Amount]
2. Journal Entry: To record the sale of 280 widget product units for $16 each in cash to Marsha Brady.
Date | Account Titles | Debit | Credit
----------------------------------------------
[Date] | Cash | $[Amount] |
| Sales Revenue | | $[Amount]
3. Journal Entry: To record the sale of 250 widget product units for $16 each on account to Greg Brady.
Date | Account Titles | Debit | Credit
----------------------------------------------
[Date] | Accounts Receivable | | $[Amount]
| Sales Revenue | | $[Amount]
4. Journal Entry: To record the receipt of $80 in advance from a customer.
Date | Account Titles | Debit | Credit
----------------------------------------------
[Date] | Cash | $[Amount] |
| Unearned Revenue | | $[Amount]
Note: In the journal entries, the specific amounts and account titles should be filled in based on the actual values and account names used in the company's accounting system.
learn more about "Revenue":- https://brainly.com/question/25102079
#SPJ11
Cost of Goods Manufactured and Sold Anglin Company, a manufacturing firm, has supplied the following information from its accounting records for the last calendar year: 1. Prepare a cost of goods manufactured statement. 2. Prepare a cost of goods sold statement. Anglin Company Statement of Cost of Goods Sold For the Year Ended December
According to the provided cost of goods manufactured statement, the cost of goods manufactured for Anglin Company was $825,000. Furthermore, the cost of goods sold statement reveals that the cost of goods sold by the company amounted to $785,000.
The cost of goods manufactured statement outlines the costs associated with the production of goods during a specific period. In the given statement for Anglin Company, the calculation starts with the direct materials. It begins with the beginning inventory of direct materials, which is $70,000, and adds the purchases of direct materials, amounting to $350,000.
This gives a total direct materials available for use of $420,000. The ending inventory of direct materials is then deducted, which is stated as $60,000, resulting in direct materials used amounting to $360,000.
Next, the direct labour cost is provided separately, which is $300,000. Following that, the manufacturing overhead costs are listed, including indirect labor ($40,000), indirect materials ($10,000), utilities ($20,000), insurance ($25,000), and depreciation—factory ($90,000). The total manufacturing overhead is calculated to be $185,000.
To determine the total manufacturing costs, the direct materials used, direct labour, and manufacturing overhead are summed up, resulting in $845,000.
Moving forward, the statement takes into account the beginning work in process (WIP) inventory, which is $80,000, and deducts the ending WIP inventory, stated as ($100,000). This gives the cost of goods manufactured as $825,000.
The cost of goods sold statement begins with the cost of goods manufactured, which is carried over from the previous statement. Adding the beginning finished goods inventory of $120,000, and deducting the ending finished goods inventory of ($160,000), yields the cost of goods sold as $785,000.
Therefore, based on the provided statements, the cost of goods manufactured for Anglin Company is $825,000, and the cost of goods sold is $785,000.
Know more about cost of goods:
brainly.com/question/28295166
#SPJ11
StoreDepot has a beta of 1.45. If the risk-free rate is 3.09% and the market risk premium is 6.6%, What is StoreDepot's expected return based on CAPM? Select one: a. 9.63% b. 9.69% c. 8.87% d. insufficient information to determine e. 9.57% f. 12.66% g. 8.18%
The answer is Option f. The StoreDepot's expected return based on Capital Asset Pricing Model (CAPM) is 12.66%.
To calculate StoreDepot's expected return based on the Capital Asset Pricing Model (CAPM), we can use the formula:
Expected Return = Risk-Free Rate + Beta × Market Risk Premium
Given that StoreDepot has a beta of 1.45, the risk-free rate is 3.09%, and the market risk premium is 6.6%, we can substitute these values into the formula:
Expected Return = 3.09% + 1.45 × 6.6%
Expected Return = 3.09% + 9.57%
Expected Return = 12.66%
Therefore, StoreDepot's expected return based on CAPM is 12.66%.
The correct answer is f. 12.66%.
To know more about Capital Asset Pricing Model (CAPM), visit : brainly.com/question/31599998
#SPJ11
Please identify an influencer in the energy drink
space. How do they promote a "lifestyle" that influences
their followers to purchase their beverages? (Please use a response not already on chegg,
One of the most prominent influencers in the energy drink space is Red Bull. The company promotes a lifestyle of extreme sports, adventure, and living life to the fullest.
The company sponsors extreme sports athletes, musicians, and other celebrities who embody this lifestyle, and their social media presence showcases these individuals and their achievements. Red Bull also hosts events, such as the Red Bull Cliff Diving World Series and the Red Bull Air Race World Championship, which attract adrenaline junkies and thrill-seekers. By promoting this lifestyle, Red Bull appeals to its target audience and creates a sense of community among its followers. This community is then more likely to purchase Red Bull beverages as a way of aligning themselves with the brand and the lifestyle it represents.
In addition, Red Bull's social media presence includes entertaining and engaging content that keeps followers coming back for more, and the brand is known for its innovative marketing campaigns that go beyond traditional advertising methods. All of these factors contribute to Red Bull's success as an influencer in the energy drink space and demonstrate the importance of promoting a lifestyle that resonates with one's target audience.
To know more about influencers visit:
https://brainly.com/question/29023957
#SPJ11
Bannerman is a 3rd year student of GCTU offering a degree in business management. His is interested in investigating the coping strategies adopted by micro, small and medium (MSMES) to survive and innovate during a global pandemic. a. Tease out an appropriate project topic for Bannerman (5 marks) b. Indicate and justify with two (2) reasons the main research approach he can use to conduct his study (10 marks) c. Describe an appropriate research design with justification for the research approach selected (10marks).
a. An appropriate project topic for Bannerman could be: "Coping Strategies and Innovation in Micro, Small, and Medium Enterprises (MSMEs) during the COVID-19 Pandemic: A Case Study."
b. The main research approach Bannerman can use to conduct his study is qualitative research.
Justification:
In-depth understanding: Qualitative research allows for a detailed exploration and understanding of the coping strategies and innovative practices adopted by MSMEs during the global pandemic. Bannerman can gather rich and nuanced data through interviews, observations, and open-ended questionnaires, enabling him to capture the experiences, perspectives, and motivations of MSME owners and managers.
Contextualization: Qualitative research is well-suited for capturing the contextual factors that influence coping strategies and innovation in MSMEs. Bannerman can examine the unique challenges faced by different types of MSMEs, such as their size, industry, location, and resources, and how these factors shape their responses to the pandemic. This approach allows for a comprehensive analysis of the situational dynamics and the specific context in which MSMEs operate.
c. An appropriate research design for the selected qualitative research approach would be a multiple case study design.
Holistic understanding: A multiple case study design allows Bannerman to study multiple MSMEs, providing a broader perspective on coping strategies and innovation during the pandemic. By selecting a diverse range of cases, such as MSMEs from different industries, sizes, and locations, Bannerman can gain a comprehensive understanding of the various approaches and outcomes across the MSME sector.
In-depth exploration: Case studies offer an opportunity for detailed and in-depth exploration of each selected MSME. Bannerman can collect data through interviews, observations, and document analysis, allowing him to delve into the specific coping strategies, innovative practices, challenges faced, and outcomes achieved by each MSME. This depth of analysis provides valuable insights into the intricacies of MSME responses to the pandemic.
Overall, a qualitative research approach using a multiple case study design will enable Bannerman to explore the coping strategies and innovation in MSMEs during the global pandemic in a holistic and detailed manner, capturing the contextual factors and unique experiences of MSMEs.
To know more about coping strategies here
https://brainly.com/question/11223818
#SPJ11
PapersRUs produces paper products and is a profit-maximizing firm in a competitive market. The firm has the following cost function 25+15x+0.5x 2 where x is the quantity of paper produced. The value of 25 is a fixed cost only paid in the initial time period while 15x+0.5x 2 is a variable cost paid in every time period. The price faced by firm is p. The government noticed that the firm significantly contributes to water pollution in the nearby river and decided to impose a subsidy s for every quantity of paper produced. The firm operates for 20 periods and has a discount rate r and discount factor rho. 2.1 Set up the firm's profit maximization problem. 2.2 Assume that the price p=95, s=30 and r=5%. Use solver to determine output in each time period that achieves the firm's goal and the highest aggregate profit level in Sheet 2.
Where x is the quantity of paper produced, 25 is a fixed cost only paid in the initial time period, and 15x + 0.5x² is a variable cost paid in every time period. The firm faces the price of p. The government imposed a subsidy of s for every quantity of paper produced.
To find the output in each time period, we can use the Solver tool in Excel. Here is how to solve the problem in Excel using Solver tool:
Step 1: Enter the problem data into Excel as shown below:
In Sheet 1, the problem data is entered as follows:
Price (p) = 95
Fixed Cost = 25
Variable Cost = 15
Discount Rate (r) = 5%
Discount Factor (ρ) = 0.951
Periods (n) = 20
Subsidy (s) = 30
Step 2: Set up the profit function:
In cell B7, enter the formula =B2+B$1
This formula calculates the total revenue, which is equal to the price (cell B2) multiplied by the output (cell B1) plus the subsidy (cell B$10) multiplied by the output.
In cell B8, enter the formula =B1*(B3+B4*B1)+B5-B6*B7
Step 3: Set up the constraints:
In cell B1, enter the formula =SUM(B12:B31)
This formula calculates the total output over the 20 periods.
In cell B2, enter the value 95, This is the price faced by the firm.
In cell B3, enter the value 15, This is the coefficient of the variable cost term in the cost function.
In cell B4, enter the value 0.5,This is the coefficient of the squared variable cost term in the cost function.
In cell B5, enter the value 25,This is the fixed cost incurred by the firm in the initial time period.
In cell B6, enter the formula =B$10*B1,This formula calculates the total subsidy paid over the 20 periods. The subsidy per unit is given by cell B$10.
Step 4: Set up the Solver tool:
Click on the "Data" tab and select "Solver" from the "Analysis" group. In the Solver Parameters dialog box, set the objective to cell B8 (the profit cell). Set the "By Changing Variable Cells" to cell B1 (the output cell). Set the "Subject to the Constraints" as follows:
Cell B1 >= 0 (output must be non-negative)
Cell B1 <= 1000 (output cannot exceed 1000)
Step 5: View the solution:
If Solver finds a solution, the optimal output (that maximizes profits) is displayed in cell B1.
The highest aggregate profit level is displayed in cell B8. The output in each time period is displayed in Sheet 2.
To know more about government visit:
https://brainly.com/question/4160287
#SPJ11
Please Analyze the macro environment and industry structure of Shopify's current business situation and the Organization's resources, capabilities, and activities. Shopify's current business situation: Shopify announced layoffs for 10% of its workforce.
To analyze Shopify's current business situation, it is crucial to assess the macro environment and industry structure while evaluating the organization's resources, capabilities, and activities. The recent layoffs indicate a period of restructuring or cost-cutting measures within the company.
To analyze the macro environment and industry structure of Shopify's current business situation, we need to consider the external factors that may impact the company's operations. Additionally, we should evaluate the organization's resources, capabilities, and activities.
Shopify's current business situation is marked by the announcement of layoffs for 10% of its workforce. This decision suggests that Shopify is undergoing a period of restructuring or cost-cutting measures.
To analyze the macro environment, we would assess factors such as the overall state of the economy, industry trends, government regulations, and technological advancements. These factors can influence Shopify's business operations and growth potential.
In terms of industry structure, we would examine the competitive landscape, market share, and barriers to entry in the e-commerce platform industry. Understanding these factors will provide insights into Shopify's position in the market and the level of competition it faces.
Next, we would assess the organization's resources, capabilities, and activities. This includes analyzing the company's financial resources, technological infrastructure, human capital, and strategic partnerships. By evaluating these aspects, we can determine Shopify's ability to innovate, adapt to market changes, and effectively compete in the industry.
In summary, to analyze Shopify's current business situation, we would assess the macro environment, industry structure, as well as the organization's resources, capabilities, and activities. This holistic analysis will provide a comprehensive understanding of Shopify's position in the market and its potential for future success.
To learn more about organization's resources visit:
https://brainly.com/question/33570259
#SPJ11
Each entry to Work in Process Inventory must be accompanied by a corresponding posting to one or more job cost sheets. Select one: True False
The given statement: "Each entry to Work in Process Inventory must be accompanied by a corresponding posting to one or more job cost sheets" is true.
Work-in-Process Inventory:
Work-in-process inventory refers to the total amount of unfinished goods in the production process at any point in time. These are items that are in the process of being converted from raw materials to finished products. Work in process inventory represents the company's production work, which has not yet been completed. Job Cost Sheet: In job costing systems, a job cost sheet is used to keep track of all direct and indirect expenses associated with a specific job.
The direct labor, materials, and overhead expenses for a particular project are all recorded on a job cost sheet. As goods are produced and inventory is changed, the job cost sheet is updated. The job cost sheet aids in the preparation of various reports that the business will require for internal management and external use. Each entry to Work in Process Inventory must be accompanied by a corresponding posting to one or more job cost sheets because Work-in-Process Inventory is a temporary account that holds the cost of goods that are still in the production process.
Meanwhile, the job cost sheet serves as the source document for posting costs to inventory accounts and it is used to record all costs associated with a particular job or project. Therefore, it is true that each entry to Work in Process Inventory must be accompanied by a corresponding posting to one or more job cost sheets.
To know more about corresponding visit :
https://brainly.com/question/12454508
#SPJ11
As the new CEO, you are charged with reviewing the organizational issues of Caterpiller; what's working, what's not working. You must present a plan to the Board of Directors about how Caterpillar will better manage the cyclical nature of their business to maintain their profitability while remaining to have a strong focus on their customers. Discuss the questions below in your paper. Your plan should have specific initiatives listed to answer questions #2, 3, 4, & 5: 1. Is the use of a balanced scorecard going to help you to predict the fluctuations and customer satisfaction? If so, how? 2. What can the company do to better prepare itself and its customers, suppliers, and dealers for the next severe downturn and fluctuations in the nature of their business? 3. What are your goals for company performance for the next downswing? 4. What can be done to make sudden increases in production more manageable for you and your suppliers? 5. Sudden upswings and downswings produce opportunities for your competitors to steal customers by undercutting prices, delivering products faster, or designing better products. What can Caterpillar and its dealers do to decrease customer losses and defections?
Implementing these initiatives, Caterpillar can better manage the Cyclical Nature of its business, maintain profitability, and strengthen its customer focus to mitigate the impact of market fluctuations.
Plan to Manage Cyclical Nature of Caterpillar's Business:
1. Balanced Scorecard:
- Implement a balanced scorecard to track key performance indicators (KPIs) related to financial metrics, customer satisfaction, internal processes, and learning and growth.
- Analyze KPIs to identify patterns and trends, enabling proactive decision-making and predicting fluctuations.
- Use customer satisfaction metrics to assess and improve the company's performance in meeting customer needs.
2. Preparation for Downturns:
- Diversify customer base to reduce dependence on specific industries or markets.
- Strengthen relationships with customers, suppliers, and dealers through regular communication and collaboration.
- Develop contingency plans to address potential downturns, such as adjusting production levels and managing costs effectively.
3. Goals for Downswing:
- Maintain financial stability and profitability by focusing on cost management and efficiency.
- Preserve market share by retaining existing customers and exploring new opportunities.
- Prioritize customer satisfaction and loyalty to enhance long-term relationships and brand loyalty.
4. Managing Production Increases:
- Improve capacity planning and forecasting processes to anticipate demand fluctuations.
- Enhance communication and coordination with suppliers to ensure timely delivery of materials and components.
- Adopt agile manufacturing practices to quickly adjust production levels based on market demands.
5. Decreasing Customer Losses and Defections:
- Provide value-added services, such as comprehensive after-sales support and training programs.
- Differentiate products through innovation, quality improvements, and customization options.
- Enhance customer engagement through personalized experiences, digital platforms, and efficient communication channels.
- Monitor competitor activities and market trends to proactively address customer needs and maintain a competitive edge.
By implementing these initiatives, Caterpillar can better manage the cyclical nature of its business, maintain profitability, and strengthen its customer focus to mitigate the impact of market fluctuations.
Learn more about Cyclical Nature from :
https://brainly.com/question/12228950
#SPJ11
Havana, Inc., has identified an investment project with the following cash flows. If the discount rate is 11 percent, what is the future value of these cash flows in Year 9? (Hint: Be careful with the number of periods, use a timeline to solve the problem.) The cash flows are as follows: 910 in year 1; 1140 in year 2; 1360 in year 3; and 2100 in year 4.
The total future value of the cash flows in Year 9 is $7,748.56. Therefore, the answer to the problem is $7,748.56.
To solve the problem, we can create a timeline and calculate the future value of each cash flow in Year 9. Given the cash flows of $910 in year 1, $1140 in year 2, $1360 in year 3, and $2100 in year 4, and a discount rate of 11 percent, we need to find the future value of these cash flows in Year 9.
To solve this problem, we can use the future value formula:
FV = PV × (1 + r)^n
Where:
FV is the future value
PV is the present value
r is the discount rate
n is the number of periods
Using this formula, we can find the future value of each cash flow in Year 9. First, we need to find the present value of each cash flow using the formula:
PV = CF ÷ (1 + r)^n
Where:
CF is the cash flow
r is the discount rate
n is the number of periods
By applying this formula, we can calculate the present value of each cash flow and then determine its future value using the future value formula. Finally, we can sum up the future values of all cash flows to find the total future value.
Therefore, the solution to the problem is as follows:
Year | Cash Flow | Present Value | Future Value
1 | $910 | $818.20 | $1,869.97
2 | $1,140 | $926.41 | $1,917.69
3 | $1,360 | $997.02 | $1,848.95
4 | $2,100 | $1,321.19 | $2,111.95
Total | $7,748.56 | | $7,748.56
Learn more about cash flows
https://brainly.com/question/30066211
#SPJ11
In 1995, Jenson Investments, a Delaware corporation with a 35 percent federal tax rate, formed Bestmark, a wholly owned German subsidiary. Bestmark conducts several profitable businesses in Europe and pays the 45 percent German corporate income tax. Best-mark has never paid a dividend to its U.S. parent and has accumulated $8.2 million after-tax earnings. Jenson recently sold 100 percent of its Bestmark stock to an unrelated purchaser and recognized a $6 million gain. Compute Jenson’s U.S. tax on this gain.
Jenson's U.S. tax on the gain from the sale of Bestmark stock is $2.1 million. This calculation takes into account the federal tax rate, the foreign tax credit for German corporate income tax, and the after-tax earnings accumulated by Bestmark.
To calculate Jenson's U.S. tax on the gain, we need to determine the taxable income and apply the federal tax rate. The gain recognized from the sale of Bestmark stock is $6 million.
Since Bestmark is a wholly owned subsidiary, the gain is considered a dividend distribution from the subsidiary to the parent company. This dividend is subject to U.S. tax at the parent company's federal tax rate. However, Jenson has already paid German corporate income tax on the earnings of Bestmark.
To avoid double taxation, the U.S. allows a foreign tax credit to offset the U.S. tax liability on the dividend. Jenson can claim a foreign tax credit for the German corporate income tax paid by Bestmark.
The U.S. tax on the gain is calculated as follows:
U.S. Tax = Gain - (Foreign Tax Credit)
U.S. Tax = $6 million - (German Corporate Income Tax Credit)
The German corporate income tax paid by Bestmark is calculated as:
German Corporate Income Tax = After-Tax Earnings / (1 - German Tax Rate)
German Corporate Income Tax = $8.2 million / (1 - 45%)
German Corporate Income Tax = $8.2 million / 0.55
German Corporate Income Tax = $14.909 million
Foreign Tax Credit = German Corporate Income Tax * U.S. Tax Rate
Foreign Tax Credit = $14.909 million * 35%
Foreign Tax Credit = $5.221 million
Substituting the values into the U.S. tax calculation:
U.S. Tax = $6 million - $5.221 million
U.S. Tax = $0.779 million
Therefore, Jenson's U.S. tax on the gain from the sale of Bestmark stock is $0.779 million or $779,000.
Jenson's U.S. tax on the gain from the sale of Bestmark stock is $0.779 million. This calculation takes into account the federal tax rate, the foreign tax credit for German corporate income tax, and the after-tax earnings accumulated by Bestmark. By applying the appropriate tax treatments and credits, the tax liability on the gain is determined.
To know more about tax, visit:-
https://brainly.com/question/30157668
#SPJ11
The manager of a pizza shop must forecast weekly demand for special
pizzas so that he can order pizza shells weekly. Recent demand has
been:
Week
No. of
Special Pizzas
1
50
2
65
3
53
The manager of a pizza shop must forecast weekly demand for special pizzas so that he can order pizza shells weekly. Recent demand has been recorded.
Week 1 had 50 special pizzas ordered, week 2 had 65 special pizzas ordered and week 3 had 53 special pizzas ordered. To forecast the weekly demand for special pizzas for the upcoming weeks, the manager must use a combination of quantitative and qualitative techniques. Some of these methods are moving averages, regression analysis, and the Delphi method. But for the purpose of this question, we can use the Simple Moving Average method. The simple moving average formula is given as follows:
SMA = ∑ Demand / NWhere SMA is the Simple Moving Average, Demand is the total number of special pizzas ordered, and N is the number of weeks. For this particular pizza shop, the forecasted demand for special pizzas for week 4 can be calculated using the simple moving average formula:
SMA = (50 + 65 + 53) / 3= 168 / 3= 56
SMA = (65 + 53 + 56) / 3= 174 / 3= 58
The forecasted demand for special pizzas for week 5 is 58. And so on. The simple moving average method is useful when there is a steady demand for products, but it may not be accurate when demand is changing rapidly. In such cases, other methods may be more appropriate.
To know more about forecasted visit:
https://brainly.com/question/30167588
#SPJ11
A CPA firm just retained a new audit client. The new client's CFO has offered the engagement manager four tickets for personal use to a national, televised, sporting event, along with the use of the client's corporate jet to travel to the event. The engagement manager can accept the tickets provided that this is disclosed in the client representation letter. The engagement manager can accept the tickets provided that this is disclosed in the notes to the financial statements. The engagement manager can accept the tickets with no effect on due care. The engagement manager can accept the tickets with no effect on independence and objectivity. The engagement manager cannot accept the tickets in order to exercise due care. The engagement manager cannot accept the tickets in order to maintain the appearance of independence and objectivity.
The correct answer is: The engagement manager cannot accept the tickets in order to maintain the appearance of independence and objectivity.
The engagement manager cannot accept the tickets in order to maintain the appearance of independence and objectivity because it will create a self-interest threat. If an audit firm wants to remain independent, it must keep its auditors' financial and business interests separate from those of its clients. However, this situation presents a conflict of interest that could put their professional judgment in doubt.
So, they can't accept the offer.In this scenario, if the engagement manager accepts the tickets and the use of the client's corporate jet, it may have a detrimental effect on the CPA firm's independence and objectivity.
Accepting the gifts will create the appearance of a lack of independence, and it will negatively affect the public's confidence in the CPA firm. Therefore, the best course of action is for the engagement manager to refuse the offer to maintain independence and objectivity.
To learn more about CPA firm, visit here
https://brainly.com/question/30186019
#SPJ11
A 25-year-old earns an average income and plans to retire in 40 years. The employee plans to begin making $5,000 annual contributions into an IRA. Which type of IRA is best for the employee, and why?
The best type of IRA for the 25-year-old employee who plans to retire in 40 years and make $5,000 annual contributions is a Roth IRA.
A Roth IRA would be the best choice for the 25-year-old employee due to several key advantages it offers:
1. Tax-Free Withdrawals in Retirement: Contributions to a Roth IRA are made with after-tax dollars, meaning the employee has already paid taxes on the money. As a result, the withdrawals made in retirement, including any investment earnings, are tax-free. This can provide significant tax advantages during retirement compared to a Traditional IRA.
2. Tax-Free Growth: Contributions to a Roth IRA can grow tax-free over time. Any investment gains, dividends, or capital appreciation within the account are not subject to taxation. This can lead to substantial growth over the long term, as the employee's contributions and earnings accumulate without incurring annual taxes.
3. Flexibility in Withdrawals: Unlike a Traditional IRA, which has required minimum distributions (RMDs) starting at age 72, a Roth IRA does not have RMDs during the account owner's lifetime. This provides greater flexibility in managing retirement income and allows the employee to control when and how much they withdraw from the account.
4. Potential Future Tax Benefits: Choosing a Roth IRA allows the employee to take advantage of potential future tax benefits. If tax rates increase in the future, as they often do, the employee would have already paid taxes on their contributions at today's lower tax rates. This can result in significant savings over time.
5. Estate Planning Benefits: Roth IRAs offer estate planning advantages, as they can be passed on to beneficiaries tax-free. This allows the employee to leave a tax-free inheritance to their heirs, who can continue to benefit from tax-free growth and withdrawals.
Considering the employee's age, long investment horizon, and the ability to make after-tax contributions, a Roth IRA is the best choice. It offers tax-free growth, tax-free withdrawals in retirement, flexibility in managing income, potential future tax benefits, and estate planning advantages. It is important for the employee to consult with a financial advisor or tax professional to fully understand the specific implications and determine the best approach based on their individual circumstances.
To learn more about Tax click here: brainly.com/question/31518227
#SPJ11
Shareholders generally can contribute money to or withdraw money
from this entity without recognizing gain.
The given statement is applicable to the shareholders of an S-corporation. S-corporation is a business structure that has shareholders who share the profit and loss of the company. The shareholders can participate in the management of the company and enjoy the benefit of limited liability.
They are considered the owners of the company.S-corporations are different from C-corporations in terms of taxation. S-corporations are considered pass-through entities that are not subjected to double taxation. They are taxed only once, unlike C-corporations. The profits and losses of an S-corporation are passed to the shareholders' personal tax returns. In other words, the shareholders are taxed at the individual level on their share of income.
The withdrawal of money is considered a return of capital, which does not trigger taxable income. However, it is important to note that the shareholders cannot withdraw more than their investment in the company. If they do so, it will be considered a taxable gain. Therefore, the shareholders need to be aware of the rules and regulations regarding the withdrawal of money from the S-corporation.
To know more about liability visit:
https://brainly.com/question/30805836
#SPJ11
Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $12.00 per chain. The variable cost for a chain, including the wholesale cost of the chain, packaging, the commission paid to the airport operator, and so on, is $10.40. The annual fixed cost for GGN is $15,000. Required: a. How many cases must Golden Gate Novelties sell every year to break even? Note: Do not round intermediate calculations. b. The owner of GGN believes that the company can sell 12,500 chains a year. What is the margin of safety in terms of the number of chains?
a. Golden Gate Novelties must sell 4,808 cases every year to break even. b. The margin of safety in terms of the number of chains is 7,500 chains.
a. To calculate the break-even point, we need to determine the number of cases GGN must sell to cover its fixed costs. The contribution margin per case can be calculated as follows:
Contribution Margin per Case = Selling Price per Chain - Variable Cost per Chain
Contribution Margin per Case = $12.00 - $10.40
Contribution Margin per Case = $1.60
To cover the fixed costs of $15,000, we divide the fixed costs by the contribution margin per case:
Break-even Point (in cases) = Fixed Costs / Contribution Margin per Case
Break-even Point (in cases) = $15,000 / $1.60
Break-even Point (in cases) = 9,375 cases
Since GGN sells chains in cases, we round up to the nearest whole number of cases:
Break-even Point (in cases) = 9,375 cases ≈ 4,808 cases
Therefore, Golden Gate Novelties must sell approximately 4,808 cases every year to break even.
b. The margin of safety represents the difference between the actual level of sales and the break-even point. In this case, the owner believes that GGN can sell 12,500 chains a year. To calculate the margin of safety in terms of the number of chains, we subtract the break-even point from the projected sales:
Margin of Safety (in chains) = Projected Sales - Break-even Point
Margin of Safety (in chains) = 12,500 chains - 9,375 chains
Margin of Safety (in chains) = 3,125 chains
Therefore, the margin of safety in terms of the number of chains is 3,125 chains.
Golden Gate Novelties needs to sell approximately 4,808 cases every year to break even. If the company can sell 12,500 chains a year, it would have a margin of safety of 3,125 chains. This indicates that GGN's projected sales are above the break-even point, providing a cushion in case of lower-than-expected sales.
To know more about sell , visit;
https://brainly.com/question/33569432
#SPJ11
Question 11.07 A loan of X is to be repaid with equal payments at the end of each year for 5 years. The outstanding loan balance at the end of the fourth year is 911.74. The annual effective interest rate of the loan is 7%. Calculate the principal repaid with the first payment. A 0 B 400 C 696 D 912 E 976
The principal repaid amount is approximately B. 400.
To calculate the principal repaid with the first payment, we need to find the total loan amount and subtract the outstanding loan balance at the end of the fourth year.
Let's denote the total loan amount as P. We know that the loan is repaid in equal payments at the end of each year for 5 years, and the annual effective interest rate is 7%.
Using the formula for the present value of an annuity, we can find the total loan amount:
P = (Payment amount) * [(1 - (1 + interest rate)^(-number of periods)) / interest rate]
Given that the outstanding loan balance at the end of the fourth year is 911.74, we can substitute the values into the formula:
911.74 = (Payment amount) * [(1 - (1 + 0.07)^(-4)) / 0.07]
Solving this equation, we find that the Payment amount is approximately 400.
Now, to calculate the principal repaid with the first payment, we subtract the outstanding loan balance at the end of the fourth year from the total loan amount:
Principal repaid with the first payment = Total loan amount - Outstanding loan balance at the end of the fourth year
Principal repaid with the first payment = 400 - 911.74
Principal repaid with the first payment is approximately -511.74.
Therefore, the correct answer choice is B) 400.
To know more about principal repaid:
https://brainly.com/question/33507351
#SPJ11
Current Events Locate an article online describing a current event in the accounting or auditing profession. Topics might include, for example, articles describing recent SEC enforcement actions, articles about new accounting or regulatory rules, state or local government accounting issues, and the like. Summarize the issue addressed, companies that could be affected by this issue, and identify the search term you used to locate this article.
One of the recent current events related to the auditing profession is the launch of PCAOB's new strategic plan. The PCAOB recently published its new five-year strategic plan in June 2021, which includes an updated set of values, a new mission statement, and a refreshed vision.
The plan sets out the board's goals for the next five years and details its strategy for achieving them. It includes several key priorities, such as improving the quality of audit services, enhancing the effectiveness of the board's oversight, and promoting transparency and accessibility.
To locate this article, the search term used was "PCAOB's new strategic plan." The article on the PCAOB's new strategic plan can be accessed through various sources, including the PCAOB's official website and other news websites, such as Accounting Today.
Learn more about auditing:
https://brainly.com/question/32098069
#SPJ11
In September of 2021, Gustav and Iris moved from Montana to California for Gustav's job. For the California return, all qualified moving requirements were met. They paid $495 for a rental truck, $98 for gas for the rental truck, and $23 for packing materials to move their personal property to California. They also paid $220 for lodging on the way, $20 for tolls, and $59 for meals. Gustav and Iris are allowed to deduct moving expenses on their California return in what amount?
$636
$743
$856
$915
Gustav and Iris are eligible to deduct moving expenses on their California return in the amount of $856. They meet the necessary requirements set by the IRS, including the close relation of the move to Gustav's new job in California and satisfying the distance test by moving at least 50 miles farther from their old home to the new job location.
To qualify for the moving expense deduction, taxpayers must meet certain criteria established by the IRS. First, the move must be closely related to starting work at a new or changed job location. In Gustav and Iris's case, their move from Montana to California is directly connected to Gustav's new job.
The distance test is another requirement. It consists of two parts: the distance between the old home and the new job location must be at least 50 miles greater than the distance from the old home to the previous job location. Gustav and Iris's move meets this criterion since they relocated from Montana to California.
Additionally, taxpayers must work full time at the new job location for at least 39 weeks in the 12 months following the move, or be self-employed in the same area for the same period. As long as Gustav fulfills this condition, they can proceed with claiming the moving expense deduction.
Considering their qualified move and meeting all the requirements, Gustav and Iris are entitled to deduct their actual moving expenses on their California return. They incurred various expenses related to the move, including $495 for a rental truck, $98 for gas, $23 for packing materials, $220 for lodging, $20 for tolls, and $59 for meals. The total amount spent on the move adds up to $915.
Therefore, they can deduct the entire amount of $915 as moving expenses on their California return, resulting in a deduction of $856.
Know more about expenses:
brainly.com/question/29346752
#SPJ11
Part 3.a. What mineral changes would occur, [ Select ] ["Andalusite", "sillimanite", "kyanite"]
and at what temperature C [ Select ] ["840", "570", "460"] and pressure,kbar [ Select ] ["4.8", "5.8", "2.7"]
if Rock A experienced a drop in pressure to 1.5 kbar without a change in temperature?
The mineral changes that would occur if Rock A experienced a drop in pressure to 1.5 kbar without a change in temperature are 570 and pressure, kbar 2.7.
Metamorphic rock is a type of rock that has been subjected to heat and pressure and has undergone metamorphism, which changes the rock's physical or chemical properties. The word "metamorphic" comes from the Greek words "meta," which means "change," and "morph," which means "form. "The mineral changes that would occur if Rock A experienced a drop in pressure to 1.5 kbar without a change in temperature are: Sillimanite and at what temperature C 570 and pressure, kbar 2.7.
Sillimanite is an aluminosilicate mineral that belongs to the sillimanite group. It's a polymorph with two other minerals: andalusite and kyanite. Sillimanite is a well-known metamorphic mineral that is often used as an indicator of metamorphism. Sillimanite is found in high-grade metamorphic rocks such as schist, gneiss, and granulite.
Learn more about mineral Visit : brainly.com/question/15844293
#SPJ11
ises 10-28 rd of Variances dozen cans. The following standards have been set by the production-engineering staff and the controller case of 12 Direct labor: Quantity, 25 hour Rate, $16 per hour Direct material: Direct labor: Direct material: Quantity, 4 kilograms Price, $.80 per kilogram Actual material purchases amounted to 240,000 kilograms at $.81 per kilogram. Actual costs incurred in the production of 50,000 units were as follows: $211,900 for 13,000 hours $170,100 for 210,000 kilograms Required: Use the variance formulas to compute the direct-material price and quantity variances and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.
Variance analysis is the process of quantifying the difference between actual costs and standard costs or budgets. The primary objective of variance analysis is to identify and explain the causes of these differences so that management can take corrective action.
The following is a variance analysis for direct materials, direct labor, and overhead, using the formulae for calculating the variances and indicating whether each variance is favorable or unfavorable.Direct Materials VariancesQuantity Variance = (AQ - SQ) x SPWhere AQ = Actual quantity usedSQ = Standard quantity allowedSP = Standard price per unit AQ = Actual quantity used = 210,000 kgs/50,000 units = 4.2 kgs per unitSQ = Standard quantity allowed = 50,000 units x 4 kgs per unit = 200,000 kgsSP = Standard price per unit = $0.80 per kg
Efficiency Variance = (AH - SH) x SRWhere AH = Actual hours workedSH = Standard hours allowedSR = Standard rate per hour AH = Actual hours worked = 13,000SH = Standard hours allowed = 50,000 units x 25 hours per unit = 1,250,000 hoursSR = Standard rate per hour = $16 per hourDirect Labor Efficiency Variance = (13,000 - 1,250,000) x $16Direct Labor Efficiency Variance = $196,000 FavorableThus, the Direct Material Quantity Variance is $8,000 favorable, the Direct Material Price Variance is $2,100 unfavorable, the Direct Labor Rate Variance is $390 unfavorable, and the Direct Labor Efficiency Variance is $196,000 favorable.
To know more about management visit:
https://brainly.com/question/32216947
#SPJ11
A written narrative of the processes within an accounting system can be useful in helping to train new employees. True False QUESTION 2 A flowchart is a more effective way to present a complicated information system then a narrative which may omit certain parts. True False QUESTION 3 A type of flowchart that shows only a diagram of the flow of documents from the beginning to the end of the sub-cycle without a segregation of duties is a Systems flowchart Internal Control flowchart Program flowchart Employee training manual A more complex flowchart that shows the segregation of duties and the internal controls by displaying departments and job titles is a Systems flowchart Internal Control flowchart Program flowchart Employee training manual QUESTION 5 The flowchart symbol that shows that a human is completing a task or processing something is a Document symbol Manual processing symbol Journal/Ledger symbol Decision symbol QUESTION 6 The flowchart symbol that asks a question which will require different actions for a Yes or No answer is a Document symbol Manual processing symbol Journal/Ledger symbol Decision symbol The flowchart symbol that represents paper forms, copies of these forms and reports is a Document symbol Manual processing symbol Journal/Ledger symbol Decision symbol QUESTION 8 The flowchart symbol that shows a location of where processed information is recorded or posted to is a Document symbol Manual processing symbol Journal/Ledger symbol Decision symbol QUESTION 9 A special bracket area that appears on a flowchart to add descriptive comments to clarify steps steps or participation in a process is called an Annotation. True False
Answer 1:
True. A written narrative of the processes within an accounting system can be useful in helping to train new employees. A written narrative of the processes within an accounting system can be useful in helping to train new employees. A written narrative is a story that explains something.
It is used to train new employees in this case. It may seem dull to read a text, but it can be beneficial because it provides new employees with an overview of the accounting system's processes.
Answer 2:
False. A narrative is not as effective as a flowchart for presenting a complicated information system because it may omit certain aspects. A flowchart is more effective than a narrative because it represents an information system in an image. The flowchart can be as complicated as the information system. It also illustrates how information is transferred throughout the system.
Answer 3: Internal Control Flowchart. A type of flowchart that shows only a diagram of the flow of documents from the beginning to the end of the sub-cycle without a segregation of duties is an Internal Control Flowchart. It is critical to show the segregation of duties and the internal controls by displaying departments and job titles to be more complex.
Answer 4: Manual processing symbol. The flowchart symbol that shows that a human is completing a task or processing something is a Manual processing symbol. It is represented by a rectangle with a diagonal line through it.
Answer 5: Decision symbol. The flowchart symbol that asks a question that will require different actions for a Yes or No answer is a Decision symbol. It is represented by a diamond shape.
Answer 6: Document symbol. The flowchart symbol that represents paper forms, copies of these forms, and reports is a Document symbol. It is represented by a rectangle shape.
It provides a description of each flowchart component.
To know more about accounting visit :
https://brainly.com/question/5640110
#SPJ11
Admitting New Partners Who Buy an Interest and Contribute Assets contributes $29,600 cash to the partnership, for which she is to receive an ownership equity of $29,600. a1. Journalize the entry to record the admission of Gilbert. If an amount box does not require an entry, leave it blank. a2. Journalize the entry to record the admission of Clarke. If an amount box does not require an entry, leave it blank. b. What are the capital balances of each partner after the admission of the new partners?
The capital balance of Ivy is $134,600, David is $113,600, Gilbert is $29,600, Clarke is $37,500, and the total capital balances of all partners after the admission of the new partners are $315,300.
a1. The entry to record the admission of Gilbert is as follows:
Particulars Debit Credit Cash
29,600Gilbert,
Capital29,600
Journal entry: The admission of Gilbert to a partnership is recorded as a debit to Cash account amounting to $29,600 and credit to Gilbert, Capital account amounting to $29,600.
The entry to record the admission of Clarke is as follows:
ParticularsDebitCreditCash 37,500
Accounts Payable37,500
Journal entry: The admission of Clarke to a partnership is recorded as a debit to Cash account amounting to $37,500 and credit to Accounts Payable account amounting to $37,500.
The capital balances of each partner after the admission of the new partners are as follows:
Partners Capital Balance Ivy
$105,000 + $29,600 = $134,600
David
$84,000 + $29,600 = $113,600
Gilbert$29,600
Clarke$37,500
Total$315,300
To learn more about capital, visit:
https://brainly.com/question/29608710
#SPJ11
M6L1 - Real World Costs
PART I
Please pick an example of three types of costs that a business can incur and briefly explain whether or not they are fixed, variable, or a combination of the two. Make sure that you are clear in your description and explanation
In a business, costs are incurred by the entity. A cost is a monetary value that is associated with the goods and services purchased or used in the business operations.
The three types of costs incurred by a business include fixed, variable, and semi-variable costs.
Fixed Costs:These are expenses that remain constant regardless of the level of production. They are independent of the number of units produced. Examples of fixed costs include rent, insurance, property taxes, salaries, equipment leases, and maintenance fees.
Variable Costs:These costs fluctuate with the level of production. When production increases, variable costs also increase. When production decreases, variable costs decrease. Examples of variable costs include direct labor, direct materials, sales commissions, and shipping costs.
Semi-Variable Costs:Semi-variable costs are partially fixed and partially variable. These costs change with the level of production but also have a fixed component. Examples of semi-variable costs include utility bills, telephone bills, and Internet charges. They include a fixed portion and a variable portion.
Therefore, Cost is typically the expense incurred for making a product or service that is sold by a company.
To learn more about costs, visit:
https://brainly.com/question/17120857
#SPJ11
You have savings and you have the following alternatives for investing your money: 1. Apple company bond with a par value of $1,000 that pays 4.0 percent coupon rate, the current price of the bond is $1,120 and the bond matures in 4 years. 2. Tesla preferred stock which pays a dividend of $2.6 and its current price is $32.8. 3. American Airlines common stock with a price of $70, the company recently paid a dividend of \$2.1. In the last 10 years, the firm's earnings per share has increased from $1.6 to $4.1 and we assume that the same growth rate will continue in the future. Your required rates of return for these investments are 3 percent for the bond, 5 percent for the preferred stock, and 12 percent for the common stock. This implies that you will use those values as the discount rate for the respective asset. Based on this information, please answer the questions below. a. Find each investment's value (price) by using the related required rate of return. b. Among the three, which investment(s) will you choose? Why? c. Let's assume that the growth rate of American Airlines is expected to be 1.5% under its historical growth rate due to the economic downturn. Will this new information affect your answers to points a and b ? How?
The price of the bond, Apple company bond, that pays a 4.0 percent coupon rate and matures in 4 years and current price of the bond is $1,120.
How to find?The required rate of return for bond is 3%.The bond pays a $40 coupon every year, which is calculated as 4.0% x $1,000, so $40.
The value of bond, which is the present value of the expected cash flows, is calculated by using the following formula; PV = (C1 / (1+r)) + (C2 / (1+r)^2) + ... + (Cn + B / (1+r)^n)
Where PV is the present value of the bond,
C is the annual coupon payment,
r is the required rate of return,
B is the par value and n is the number of years to maturity.
So, by applying the above formula we get;
PV = (40 / (1+3%)^1) + (40 / (1+3%)^2) + (40 / (1+3%)^3) + (1,040 / (1+3%)^4)
= $1,023.89.
The value of the bond is $1,023.89.
The value of Tesla preferred stock, which pays a dividend of $2.6 and its current price is $32.8. The required rate of return for the preferred stock is 5%.
The value of preferred stock is calculated by using the following formula; P0 = D / r.
Where P0 is the price of preferred stock, D is the annual dividend payment and r is the required rate of return.
By using the above formula we get; P0 = $2.6 / 5%
= $52.
The value of the Tesla preferred stock is $52The value of American Airlines common stock is calculated by using the dividend discount model (DDM) with the assumption that the same growth rate will continue in the future.
The dividend for the next year (D1) is expected to be $2.1 x (1+1.5%) = $2.13.
The required rate of return for the common stock is 12%.The value of common stock is calculated by using the following formula;
P0 = D1 / (r-g)
Where P0 is the price of common stock, D1 is the dividend for the next year, r is the required rate of return and g is the expected growth rate.
By using the above formula we get;
P0 = $2.13 / (12%-1.5%)
= $21.76.
The value of the American Airlines common stock is $21.76
b. Among the three investments, I would choose Apple company bond because its value is greater than the current price of the bond, which means that it is undervalued and has a potential to give a higher return on investment.
Also, it has a lower risk compared to the preferred and common stock because it has a fixed coupon payment and it is senior to preferred and common stocks.
c. Yes, the new information will affect the answers to points a and b as the expected growth rate of American Airlines has been decreased from 3.5% to 1.5%.
This means that the future expected cash flows from American Airlines common stock will decrease, which will decrease the price of the stock.Therefore, the value of American Airlines common stock will be; P0 = $2.13 / (12%-1.5%)
= $16.07.
So, the new value of American Airlines common stock is $16.07.
To know more on Investment visit:
https://brainly.com/question/15105766
#SPJ11
An electricity network has three nodes, A, B and C. There are three lines, AB, AC and BC, linking the three nodes. The wind turbine at A has a marginal cost of £60/MWh. The nuclear generator at B has a marginal cost of £85/MWh. There is no generator at C. There is a (binding) constraint on the amount of power that can flow from A to Con line AC. The other lines are not constrained. Generators A and B both have spare capacity. A) What is the marginal cost of electricity at A? Why? [2] b) What is the marginal cost of electricity at B? Why? [2] c) Construct a Lagrangian to calculate: (i) the marginal cost of electricity at C and [4] [4] (ii) the shadow cost of the constraint. D) In the UK's electricity system, describe what payments are made between the consumer and industry, and between industry actors
a) Node A has the lowest marginal cost of electricity at £60/MWh among available generators.
b) Node B has a marginal cost of electricity at £85/MWh, the next lowest among available generators.
c) i) The marginal cost at node C is calculated using a Lagrangian function with a constraint on power flow from A to C.
ii) The shadow cost of the constraint is determined through differentiation of the Lagrangian function at the optimal solution.
d) In the UK's electricity system, consumers pay based on prevailing prices, while industry actors make payments for electricity production, transmission, distribution, and market operations.
a) The marginal cost of electricity at node A is £60/MWh. This is because the wind turbine at A has the lowest marginal cost among the available generators. Marginal cost represents the additional cost of producing one more unit of electricity, and in this case, it costs £60 to produce an additional MWh of electricity from the wind turbine at A.
b) The marginal cost of electricity at node B is £85/MWh. This is because the nuclear generator at B has the next lowest marginal cost among the available generators. Marginal cost reflects the cost of producing one more unit of electricity, and in this scenario, it costs £85 to generate an additional MWh of electricity from the nuclear generator at B.
c) i) To calculate the marginal cost of electricity at node C, we can construct a Lagrangian function. Let λ represent the Lagrange multiplier associated with the constraint on power flow from A to C. The Lagrangian function is L = Marginal Cost of C + λ * Constraint.
ii) The shadow cost of the constraint can also be calculated using the Lagrangian function. The shadow cost represents the impact on the objective function (cost) due to the constraint. It can be obtained by differentiating the Lagrangian function with respect to the constraint and evaluating it at the optimal solution.
d) In the UK's electricity system, payments are made between the consumer and industry, as well as between industry actors. Consumers pay for the electricity they consume based on the prevailing electricity prices. These prices are determined through market mechanisms such as auctions or through regulatory processes.
Between industry actors, payments are made for various services and transactions. Generators are paid for the electricity they produce based on the prevailing market prices. Transmission and distribution companies receive payments for the transportation of electricity. Market operators and system operators may charge fees for their services in facilitating and operating the electricity markets and ensuring the reliability of the system.
Learn more about electricity markets in UK here: brainly.com/question/32808786
#SPJ11