If a small change in price creates a large change in demand, then we would say that the demand is elastic. Option A is correct answer.
We would describe the demand as being very elastic if a minor change in price resulted in a significant change in the amount required, i.e., being extremely sensitive to price changes. In contrast, we would state that the demand is inelastic if a significant change in price only causes a relatively minor change in the amount required.
The change in consumption of a product in response to a change in its price is gauged by the term "price elasticity of demand." The good is elastic if price elasticity exceeds 1; it is inelastic if price elasticity is less than 1. A good is completely inelastic when the price elasticity is 0.
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The complete question is, "If a small change in price creates a large change in demand, then we would say that the demand is
A. elastic
B. inelastic"
jm case inc. has a market value of $5 million with 500,000 shares outstanding. the book value of its equity is $1,750,000. what is jm case’s price per share?
Jm case has a market value of $5 million with 500,000 shares outstanding. the book value of its equity is $1,750,000. $10 is jm case’s price per share.
You divide the market value of equity by the number of outstanding shares to get JM Case Inc.'s price per share. In this instance
Equity market value is $5,000,000.
There are 500,000 outstanding shares.
Price per share is calculated as Market Value of Equity /Amount of Outstanding Shares.
Price per share = $5,000,000/ 500,000.
Each share costs $10.
The price per share of JM Case Inc. is $10 as a result.
The market value of equity reflects how the market now perceives the company's value, which is influenced by variables like investor attitude, potential future growth, market conditions, and industry trends.
The net value of the company's assets after subtracting liabilities is what the book value of equity, on the other hand, which is generated from the financial statements of the business, reflects.
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13) Chamberlain Company wants to issue new 13-year bonds for some much-needed expansion projects. The company currently has 7.6 percent coupon bonds on the market that sell for $1,104.83, make semiann
The Chamberlain Company can issue new 13-year bonds with a coupon rate of 7.6 percent.
In order to raise funds for their expansion projects, the Chamberlain Company can issue new 13-year bonds with a coupon rate of 7.6 percent. The current market price of the existing bonds with a similar coupon rate is $1,104.83. This means that investors are willing to pay that price to purchase these bonds. By offering new bonds with a coupon rate of 7.6 percent, Chamberlain can attract potential investors who are seeking similar returns on their investments.
The coupon rate of a bond represents the annual interest payment as a percentage of the bond's face value. In this case, the 7.6 percent coupon rate indicates that the bondholders will receive an annual interest payment equal to 7.6 percent of the face value of the bonds. This regular interest payment is typically made semiannually.
The market price of a bond is influenced by various factors, such as the prevailing interest rates, the creditworthiness of the issuer, and the time to maturity. If the market price of the existing bonds is higher than their face value, it indicates that the effective interest rate demanded by investors is lower than the coupon rate. Conversely, if the market price is lower than the face value, it implies that the effective interest rate is higher.
By issuing new bonds with a coupon rate of 7.6 percent, Chamberlain aims to attract investors by offering a similar rate of return as the existing bonds. The company's decision to issue new bonds reflects its confidence in its ability to generate sufficient cash flows to make interest payments and repay the principal amount upon maturity.
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The Deputy Chief Executive (DCE) leadership behavior is described as "friendly and approachable, helps employees with personal problems, develops a supportive and friendly work environment, and is highly concerned about subordinates" comfort, well-being, and satisfaction". Use 'Ohio Leadership Studies' to specify DCE's leadership behavior. [Explanation is not required) Use the editor to format your answer
The Deputy Chief Executive (DCE) exhibits a human relations leadership behavior, as described by the Ohio Leadership Studies.
The Ohio Leadership Studies, conducted in the 1940s and 1950s, identified two primary dimensions of leadership behavior: consideration and initiating structure. Consideration refers to a leader's behavior that fosters good relationships, shows concern for subordinates, and creates a supportive work environment. The DCE's leadership behavior aligns with consideration, as they are described as friendly, approachable, and highly concerned about subordinates' well-being and satisfaction. They also help employees with personal problems, indicating their supportive approach towards their team members.
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In calculating the annual worth of an alternative over one life cycle, the value obtained is: a. The same value that would be obtained if two or more life cycles were used to calculate the annual worth. b. The same value that would be obtained in calculating the annual worth of infinite service for the alternative. c. The same value that would be obtained if the present worth of one life cycle were annualized over the alternative's life cycle. d. All of the above.
In calculating the annual worth of an alternative over one life cycle, all of the above are correct. (Option D).
In this case, the statement is referring to the calculation of the annual worth of an alternative over one life cycle. The annual worth represents the equivalent uniform cash flow that would occur each year over the life cycle of the alternative.
The statement suggests that the value obtained through the calculation of the annual worth over one life cycle would be the same as the value obtained in the following scenarios:
a. If two or more life cycles were used to calculate the annual worth, meaning the calculation is extended beyond a single life cycle.
b. If the annual worth of infinite service for the alternative was calculated, which assumes the alternative provides services indefinitely.
c. If the present worth of one life cycle was annualized over the alternative's life cycle, meaning the present worth value is spread out uniformly over the entire life cycle.
In summary, option d indicates that all of these approaches would yield the same value for the annual worth of an alternative over one life cycle.
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Clothes Co., has manufactured their textiles domestically for several decades. Management is considering offshoring some aspects of the fabric production. Question: Which of the types of risk mentioned below could Clothes Co. potentially experience if Management chooses to offshore production. Select the best choice. O a. Vendor risks. O b. Country risks. O c. Strategic risks. O d. All of the above
Clothes Co. has manufactured their textiles domestically for several decades. The management is considering offshoring some aspects of the fabric production. So the correct option is D. All of the above
Offshoring some aspects of the fabric production is a common way for businesses to cut costs, gain access to cheaper labor and raw materials, or reach new markets. However, offshoring production does come with risks. If the management chooses to offshore production, the following risks are likely to be experienced by Clothes Co:
Vendor risks: Offshoring production means engaging in a relationship with a vendor to source raw materials or finished products. Vendor risks include a lack of quality, delays in delivery, and the vendor going out of business.Country risks: Offshoring production to a foreign country can expose businesses to risks unique to that country, including political instability, natural disasters, and regulatory changes.
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Exercise 5-3A Classifying costs and identifying the appropriate cost driver Anniston Manufacturing incurred the following costs during Year 2 to produce its high-quality preci- sion instruments. The company used an activity-based costing system and identified the following activities: 1. Depreciation on manufacturing equipment. 2. Materials handling. 3. Inventory storage. 4. Inspection of each batch produced. 5. Salaries of receiving clerks. 6. Setup for each batch produced. 7. Insurance on production facilities. Required a. Classify each activity as a unit-level, batch-level, product-level, or facility-level activity. b. Identify an appropriate cost driver (allocation base) for each activity.
The cost driver or allocation base is a factor that measures the consumption of resources by each activity and is used to allocate the costs to products or services.
a. Classifying activities as unit-level, batch-level, product-level, or facility-level:
Depreciation on manufacturing equipment: Facility-level activity.
Materials handling: Batch-level activity.
Inventory storage: Product-level activity.
Inspection of each batch produced: Batch-level activity.
Salaries of receiving clerks: Unit-level activity.
Setup for each batch produced: Batch-level activity.
Insurance on production facilities: Facility-level activity.
b. Identifying an appropriate cost driver (allocation base) for each activity:
Depreciation on manufacturing equipment: The cost driver could be machine hours or production hours.
Materials handling: The cost driver could be the number of batches or the number of material movements.
Inventory storage: The cost driver could be the average inventory value or the square footage of storage space.
Inspection of each batch produced: The cost driver could be the number of batches or the number of inspections.
Salaries of receiving clerks: The cost driver could be the number of units received or the number of receiving transactions.
Setup for each batch produced: The cost driver could be the number of setups or the setup time.
Insurance on production facilities: The cost driver could be the total value of production facilities or the square footage of production facilities.
Note: The choice of cost driver may vary depending on the specific circumstances and the company's cost allocation methodology.
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was the drastic measure kublai khan used to ensure that the currency circulated necessary?
Whether the drastic measure Kublai Khan used to ensure that the currency circulated necessary is yes. Kublai Khan, the founder of the Mongol Empire, took several drastic measures to ensure that the currency circulated, including creating paper currency and punishing anyone who refused to accept it.
Kublai Khan was concerned with maintaining political and economic control over the vast Mongol Empire. As a result, he recognized the importance of a strong and stable currency that could be used throughout the empire to facilitate trade and commerce. To address this issue, Kublai Khan developed a paper currency known as chao, which was backed by the government.
This paper currency was highly successful and became widely accepted throughout the Mongol Empire. In addition, Kublai Khan punished anyone who refused to accept the currency, which helped to ensure that it remained in circulation.Therefore, the drastic measure Kublai Khan used to ensure that the currency circulated was necessary. It allowed for the Mongol Empire to maintain political and economic control while also promoting trade and commerce within the empire.
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At the beginning of the year, an investment fund was established with an initial deposit of 1000. A new deposit of 1000 was made at the end of 4 months. Withdrawals of 200 and 500 were made at the end of 6 months and 8 months, respectively. The amount in the fund at the end of the year is 1560. Calculate the dollar-weighted yield rate earned by this fund during the year. 28.89% 26.00% 22.61% 20.00% 18.57%
The dollar-weighted yield rate earned by this fund during the year is 26.00%. To calculate the dollar-weighted yield rate, we need to consider the timing and amount of cash flows into and out of the fund.
In this case, the initial deposit was $1000, and an additional deposit of $1000 was made at the end of 4 months. Withdrawals of $200 and $500 were made at the end of 6 months and 8 months, respectively. The ending amount in the fund is $1560.
To calculate the dollar-weighted yield rate, we can use the formula:
Dollar-Weighted Yield Rate = (Ending Value - Beginning Value) / Beginning Value
Using the given information, the beginning value of the fund is $1000, and the ending value is $1560. Therefore, the dollar-weighted yield rate is ($1560 - $1000) / $1000 = 0.56.
To convert the decimal to a percentage, we multiply by 100. Therefore, the dollar-weighted yield rate earned by this fund during the year is 0.56 * 100 = 56.00%.
However, none of the provided answer options match the calculated rate. The closest option is 26.00%.
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Suppose the reserve requirement is initially set at 15%. a. At a reserve requirement of 15%, what is the value of the money multiplier? b. If the reserve requirement is 15% and the Fed increases reserves by $20 billion, what is the total increase in the money supply?
a.) the reserve ratio is 15%, the money multiplier is 1/0.15 = 6.67.
b.) an increase in reserves of $20 billion can lead to a total increase in the money supply of $133.4 billion.
a.) The reserve requirement is the percentage of deposits banks are required to keep on reserve at the Fed. The reserve requirement limits the amount of money banks can create through loans. The money multiplier is the amount by which the money supply expands through the process of money creation.
The money multiplier is the reciprocal of the reserve ratio, which is the percentage of deposits banks hold as reserves. This means that if the reserve ratio is 15%, the money multiplier is 1/0.15 = 6.67. This means that for every $1 of reserves banks hold, they can create up to $6.67 of new money. If the reserve requirement is 15%
b.) The Fed increases reserves by $20 billion, the total increase in the money supply can be calculated using the money multiplier as follows:
Total increase in the money supply = Money multiplier x Change in reserves= 6.67 x $20 billion= $133.4 billionThis means that the $20 billion increase in reserves can lead to a total increase in the money supply of $133.4 billion.
This is because banks can create up to $6.67 of new money for every $1 of reserves they hold. Therefore, an increase in reserves of $20 billion can lead to a total increase in the money supply of $133.4 billion.
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Peter is a student. All of Peter's disposable income is used to pay his post-secondary education expenses. While he has no liabilities (he is on a scholarship), he does have a credit card that he typically uses for emergencies. He and his friend went on a $2000 shopping spree in Toronto, which Peter charged to his credit card. Peter has $50 in his wallet, but his bank accounts are empty. Peter has an old TV worth about $170. Peter's other assets total about $297. What is Peter's debt to asset ratio, as a percentage?
OA. 4.283
OB. 428 3
OC. 3.868
OD. 386.85
The debt-to-asset ratio as a percentage is approximately 386.85%.
Therefore, the closest option is OD. 386.85. Hence option D) is correct.
To calculate Peter's debt-to-asset ratio, we need to determine his total debt and total assets.
Total Debt:
Peter's only debt is the $2000 shopping spree charged to his credit card.
Total Assets:
Peter's assets include:
Cash in his wallet: $50
Value of his old TV: $170
Other assets totaling: $297
Total Assets = $50 + $170 + $297 = $517
Debt-to-Asset Ratio:
Debt-to-Asset Ratio = (Total Debt / Total Assets) * 100
Debt-to-Asset Ratio = ($2000 / $517) * 100 ≈ 386.85
The debt-to-asset ratio as a percentage is approximately 386.85%.
Therefore, the closest option is OD. 386.85. Therefore option D) is correct.
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How do performance metrics assist with the "work life adjust of
representative" you mentioned?
Performance metrics can assist in the "work life adjust of representative" in several ways. First, these metrics can help the company identify areas where the representatives are struggling and need assistance.
This can be in terms of the amount of work they are handling, the type of work they are handling, or any other challenges that may be affecting their productivity. By identifying these areas, the company can then come up with strategies to help the representatives address these challenges. Secondly, performance metrics can help in setting goals and objectives for the representatives. When a representative knows what is expected of them and how they will be evaluated, they are better able to focus on their work and adjust their work-life balance accordingly. They can also prioritize their tasks based on what is most important to the company and what will help them achieve their goals.Finally, performance metrics can help the representatives to monitor their own progress. By having access to data on their performance, they can identify areas where they are excelling and areas where they need improvement. This can help them make adjustments to their work habits and routines to improve their overall productivity and work-life balance.
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Select the answer(s) which is(are) most correct?
I. If a company increases its current liabilities by $1,000 and simultaneously increases its inventories by $1,000, its current ratio must rise.
II. If a company increases its current liabilities by $1,000 and simultaneously increases its inventories by $1,000, its quick ratio must fall.
III. A company's quick ratio may never exceed its current ratio.
Select one:
a. I & III only
b. II & III only
c. Ill only
d. I only
e. Il only
The correct answer is option b, that is, II & III only. If a company increases its current liabilities by $1,000 and simultaneously increases its inventories by $1,000, its quick ratio must fall and company's quick ratio may never exceed its current ratio.
I. This statement is incorrect. If a company increases its current liabilities by $1,000 and simultaneously increases its inventories by $1,000, the current ratio may increase, decrease, or remain unchanged, depending on the magnitude of other current assets and liabilities.
II. This statement is correct. The quick ratio (also known as the acid-test ratio) is a more stringent measure of liquidity that excludes inventories from current assets. If inventories increase while current liabilities increase, the quick ratio will generally fall since inventories are not considered quick assets.
III. This statement is correct. The quick ratio is always equal to or less than the current ratio because it excludes inventories from current assets, making it a more conservative measure of liquidity.
Therefore, the most accurate answer to the question is option b (II & III only).
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please use financial calc/ formula not excell thank you!
4. River Corp. has 6.75 percent coupon bonds making annual payments with a YTM of 9 percent. The current yield on these bonds is 7.5 percent. How many years do these bonds have left until they mature?
To calculate the number of years left until the bonds mature, we can use the formula for the yield to maturity (YTM) of a bond:
YTM = (Annual Interest Payment + (Face Value - Purchase Price) / Number of Years) / ((Face Value + Purchase Price) / 2)
In this case, the annual interest payment is 6.75% of the face value, which is also the current yield. Let's assume a face value of $1,000.
Current Yield = Annual Interest Payment / Purchase Price
7.5% = 6.75% / Purchase Price
Solving for Purchase Price:
Purchase Price = 6.75% / 7.5% = 0.9
Now, substituting the values into the YTM formula:
9% = (6.75% + (1,000 - 0.9) / Number of Years) / ((1,000 + 0.9) / 2)
Simplifying the equation:
9% = (6.75% + 999.1 / Number of Years) / (1000.9 / 2)
9% = (6.75% + 999.1 / Number of Years) / 500.45
Cross-multiplying:
9% * 500.45 = 6.75% + 999.1 / Number of Years
45.04 = 6.75% + 999.1 / Number of Years
Rearranging the equation:
999.1 / Number of Years = 45.04 - 6.75%
999.1 / Number of Years = 38.29%
Now, we can solve for the number of years:
Number of Years = 999.1 / 38.29%
Number of Years ≈ 26.09
Therefore, these bonds have approximately 26 years left until they mature
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One of management's responsibilities is to ensure their team's work aligns to the company's business strategies. Respond to the following prompt in a minimum of 175 words: - What leadership theories have you seen used in your own workplace? - Which were most effective? - Which were the least effective? Why? - How did the execution of these theories align with your company's business strategies?
Transformational leadership has been the most effective leadership theory I have seen being used in my workplace.
On the other hand, autocratic leadership has been the least effective due to its negative impact on staff morale and creativity.
The execution of these theories aligned with my company's business strategies, with transformational leadership promoting creativity and innovation, while autocratic leadership hinders it.
In my workplace, I have seen various leadership theories being used. The most effective theory I have seen used is the transformational leadership theory. This theory involves a leader inspiring and motivating their team members to perform beyond their expected levels and achieve goals that they never thought they could. The leaders using this theory communicate well with their team members and have a clear vision of what they want to achieve.
The least effective leadership theory I have seen being used is the autocratic leadership theory. This theory involves a leader making decisions without the input of their team members. This approach leads to team members feeling unheard and not valued, which can affect productivity and lead to high staff turnover rates.
The execution of these theories aligns with my company's business strategies in that transformational leadership promotes creativity and innovation, which aligns with the company's strategy of staying ahead of the competition. On the other hand, autocratic leadership hinders creativity and innovation, which goes against the company's strategy of staying ahead of the competition.
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QUESTION 2 Budgeted Production in unit Budgeted Fixed Costs Budgeted VC per unit Operating Costs per Unit Fixed Operating Costs Selling price per unit Expected sales per unit 500 100.000 150 75 95,000
Fixed Cost per Unit = $200
The operating income = $575,000
The Fixed Costs = $100,000
How to solve for the fixed costsBudgeted Fixed Cost per Unit
To calculate the budgeted fixed cost per unit, we take the total fixed costs and divide them by the number of units.
Budgeted Fixed Costs = $100,000
Budgeted Production in Units = 500
So, Fixed Cost per Unit = Budgeted Fixed Costs / Budgeted Production Units
= $100,000 / 500 = $200 per unit
Variable Costing and Absorption Costing
i) Variable Costing:
Under variable costing, only variable costs are included in the cost of goods sold (COGS). Fixed costs are treated as period expenses.
Sales = Expected sales per unit * Selling price per unit
= 500 units * $1,500 = $750,000
Cost of Goods Sold (COGS) = Variable Costs per Unit * Expected sales per unit
= $150 * 500 = $75,000
Fixed Costs = $100,000
Operating Income = Sales - COGS - Fixed Costs
= $750,000 - $75,000 - $100,000 = $575,000
ii) Absorption Costing:
Under absorption costing, both variable and fixed costs are included in the cost of goods sold (COGS).
Cost of Goods Sold (COGS) = (Variable Costs per Unit + Fixed Cost per Unit) * Expected sales per unit
= ($150 + $200) * 500 = $175,000
Sales = Expected sales per unit * Selling price per unit
= 500 units * $1,500 = $750,000
Operating Income = Sales - COGS
= $750,000 - $175,000 = $575,000
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Question
Budgeted Production in units 500 500 Budgeted Fixed Costs 100,000 100,000 Budgeted VC per unit 150 150 Operating Costs per Unit 75 75 Fixed Operating Costs 95,000 95,000 Selling price per unit 1,500 1,500 Expected sales per unit 200 500 Based on the above information what is the budgeted fixed cost per unit? Compute the Sales, Cost of Goods Sold and the Operating Income under 1) Variable Costing and 2) Absorption Costing.
If the market price of apples increases and the market quantity decreases, then which of the answer choices best explains this?
Group of answer choices
Supply of apples increased.
Demand for apples decreased.
Supply of apples decreased.
Demand for apples increased
The price of a good or service falls, the quantity demanded usually rises.In this situation, the market price of apples has increased, which has resulted in a decrease in the quantity demanded. Therefore, the answer choice that best explains this is "Demand for apples decreased".
Market price of apples increases and the market quantity decreases, then the answer choice that best explains it is "Demand for apples decreased".When the market price of apples increases, the quantity demanded by consumers decreases, while the quantity supplied by producers increases. As a result, the market is unable to maintain equilibrium, and a surplus of apples is created.However, the market price of apples decreases when demand exceeds supply. When demand exceeds supply, the market price increases because there are not enough apples to meet consumer demand. The market price falls when supply exceeds demand because there are more apples than consumers need or want.In economics, demand is the amount of a good or service that consumers are willing and able to buy at a certain price. When the price of a good or service rises, the quantity demanded usually falls. Conversely, when the price of a good or service falls, the quantity demanded usually rises.In this situation, the market price of apples has increased, which has resulted in a decrease in the quantity demanded. Therefore, the answer choice that best explains this is "Demand for apples decreased".
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which of the following statements about financial ratios is true?
A. Generally, investors prefer a low current ratio. B. A low asset turnover ratio shows that the company is financially stable. C. The goal of management is to decrease earnings per share over time. D. A low debt ratio shows that the company will be more likely to pay its debts as they come due. E. Investors consider a current ratio of 1 to 1.5 to be desirable.
Investors prefer the current ratio of 1:1.5 if the statements below regarding financial metrics are true.
Option e is correct.
A low debt ratio indicates that the company has less debt compared to its total assets. This suggests that the company has a low risk of default and is likely to be able to pay its debts when they are due.
Investors currently prefer a ratio of 1:1.5. A liquidity ratio of 1:1.5 is generally considered desirable for investors. This range indicates that the company has sufficient current assets to cover its current liabilities. Demonstrates the right balance between liquidity and financial stability.
Hence, option e is correct .
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5) According to the video, the purpose in asking the right questions of a customer is to ________________ __________.
a.get to know a customer’s needs
b.eliminate all barriers to doing business together
c.become familiar with the prospective customer’s company
d.become friends with the customer.
e.understand a customer’s personality
The purpose in asking the right questions of a customer is to get to know a customer’s needs. Option a is correct.
By asking the right questions, a salesperson or business professional can gain insight into the specific needs and requirements of the customer. This understanding allows them to tailor their offerings or solutions to meet those needs effectively.
By probing and asking relevant questions, they can gather information about the customer's pain points, goals, preferences, and challenges, which helps in building a strong rapport and providing a personalized experience. Ultimately, understanding the customer's needs enables the salesperson to provide value and deliver solutions that align with the customer's objectives, increasing the chances of a successful business relationship. Option a is correct.
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Tom sells mutual funds on a graduated commission structure. He receives 2.5% on the first $40,000 of sales in a month, 3.6% on the next $40,000, and 4.7% on all further sales. What are his gross earnings for a month in which he sells $170,000 worth of mutual funds?
His gross earnings for a month in which he sells $170,000 worth of mutual funds will be $6,670.
How to find gross earnings?We know that :
1st month: $40,000 × 2.5% = $1,000
Next month: $40,000 × 3.6% = $1,440
To determine Further sales, we subtract first and next month sales from $170,000.
$40,000 + $40,000 - $170,000 = $90,000
Further sales: $90,000 × 4.7% = $4,230
Now lets sum up gross earnings to get total gross earnings:
$1,000 + $1,440 + $4,230 = $6,670
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Please help! Will thumbs
up!
The market demand for a good is P = 90 - 2Q. The good can be produced at a constant cost of $50. How much Dead Weight Loss (DWL) is created if the market if served by monopolist who is able to practic
The Deadweight Loss (DWL) created by the monopolist in this market is -$200.
In perfect competition, the market equilibrium occurs where the supply curve intersects the demand curve. The quantity produced in perfect competition can be found by equating the market demand and market supply:
90 - 2Q = Q (since supply equals demand)
3Q = 90
Q = 30
Now, let's calculate the price in perfect competition using the demand equation:
P = 90 - 2Q
P = 90 - 2(30)
P = 90 - 60
P = 30
Under perfect competition, the equilibrium quantity is 30 units, and the equilibrium price is $30.
The marginal cost (MC) is constant at $50, as given. To find the monopolist's marginal revenue (MR), we differentiate the market demand equation with respect to quantity (Q):
MR = d(PQ)/dQ = P + Q(dP/dQ)
Given the market demand equation P = 90 - 2Q, we can calculate dP/dQ as:
dP/dQ = -2
Substituting this into the MR equation:
MR = P + Q(dP/dQ) = (90 - 2Q) + Q(-2) = 90 - 4Q
To find the monopolist's profit-maximizing quantity (Q_m), we set MC equal to MR:
MC = MR
$50 = 90 - 4Q_m
4Q_m = 90 - $50
4Q_m = $40
Q_m = $40 / 4
Q_m = 10
Substituting Q_m into the demand equation to find P_m (the monopolist's price):
P_m = 90 - 2Q_m
P_m = 90 - 2(10)
P_m = 90 - 20
P_m = $70
Now, let's calculate the DWL under the monopoly. DWL represents the loss in consumer and producer surplus compared to the perfect competition scenario.
DWL = 0.5 * (Q_m - Q_c) * (P_m - MC)
Where:
Q_m is the quantity under monopoly (10 units)
Q_c is the quantity under perfect competition (30 units)
P_m is the price under monopoly ($70)
MC is the marginal cost ($50)
DWL = 0.5 * (10 - 30) * ($70 - $50)
DWL = 0.5 * (-20) * $20
DWL = 0.5 * (-400)
DWL = -$200
Note that the negative sign indicates a loss in consumer and producer surplus compared to the perfect competition scenario.
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You are looking to launch a new hotel chain, Roxy.
To launch Roxy you are expected to invest $500nmillion this year (year = 0). You are then expected to generate free cash flows of $27 million a year starting in year 1. From then, these cash flows are expected to grow 3% per year in perpetuity. Assume these cash flows are received at the end of each year.
Here are reports of publicly traded firms, and the expected returns on the government bond (treasury) and the risk premium on the value-weighted market portfolio:
Company
Dropbox
Ikea
Intercontinental Hotels Group
Market
Value
Equity
900
1,000
7,500
Market
of Value
Debt
150
100
2,500
of
Assume CAPM holds for all assets, and the debt of Dropbox, Ikea and Intercontinental Hotels Group is risk free. None of these firms hold excess cash assets.
Answer the following questions:
a) If Roxy was 100% equity financed, what would be a reasonable estimate of the expected ROE?
b) What is Roxy's WACC?
c) Estimated value of Roxy?
d) Estimated gain from investing in Roxy?
Let's assume the risk-free rate is 2% and the market risk premium is 5%.
a) If Roxy was 100% equity financed, the expected ROE can be estimated using the CAPM formula:
Expected ROE = Risk-free rate + Beta × Market risk premium
Since Roxy is a new hotel chain, we don't have a specific beta for it. Let's assume a beta of 1.2.
Expected ROE = 2% + 1.2 × 5% = 8%
b) The WACC (Weighted Average Cost of Capital) can be calculated using the formula:
WACC = (Equity / Total Value) × Cost of Equity
Assuming 100% equity financing, the WACC is equal to the expected ROE.
WACC = 8%
c) To estimate the value of Roxy, we can use the perpetuity formula:
Value = Cash Flow / (Discount Rate - Growth Rate)
The cash flow in perpetuity is the expected cash flow in year 1, which is $27 million.
Value = $27 million / (8% - 3%) = $540 million
d) The estimated gain from investing in Roxy can be calculated by subtracting the initial investment from the estimated value:
Gain = Value - Initial Investment
= $540 million - $500 million
= $40 million
Therefore, the estimated gain from investing in Roxy would be $40 million.
Please note that these calculations are based on the assumptions made regarding the risk-free rate, market risk premium, and beta. The actual values may vary and should be carefully considered when making investment decisions.
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Complete the following sentence. Because money functions as a ________ it eliminates the need for bartering.
A. store of value
B. double coincidence of wants
C. medium of exchange
The answer to the question is C. medium of exchange. Money functions as a medium of exchange because it is a common unit of measurement that can be used to buy and sell goods and services. This eliminates the need for bartering, which is the direct exchange of goods and services.
Bartering is a system of exchange in which goods and services are directly exchanged for other goods and services. This system is inefficient because it requires both parties to have something that the other party wants. For example, if a farmer wants a haircut, he would need to find a barber who wants a bushel of wheat. This can be difficult and time-consuming.
Money solves this problem by providing a common unit of measurement that can be used to buy and sell goods and services. This means that the farmer can sell his wheat to anyone who has money, and then use that money to buy a haircut from any barber. This system is much more efficient than bartering.
In addition to eliminating the need for bartering, money also has other advantages. It is a store of value, which means that it can be saved and used to purchase goods and services in the future. It is also a standard of deferred payment, which means that it can be used to make payments for goods and services that will be delivered in the future. Money is an essential part of the modern economy. It allows for the efficient exchange of goods and services, and it provides a store of value and a standard of deferred payment.
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Question 1: ABL shares are currently trading at a price of $9, while HHT shares are trading at a price of $48.68. The risk-free rate is 1.29% per year. Using the information above, perform each of the following tasks:
a) Identify which of the following options are in-the-money, out-of-the-money or at-the-money: Call on ABL with a strike of $9.43, Call on ABL with a strike-price of $5, Put on HHT with a strike-price of $62.92
b) If HHT shares have a 77% chance of increasing by 10% and a 23% chance of decreasing by 10% by the date of the option expiration, what will be the expected return on HHT shares and the expected return on a protective put position? For simplicity you may assume the put has a price of $1 and has the same strike-price as listed above.
A. Call on ABL with a strike of $9.43 ⇒ out-of-the-money. Call on ABL with a strike-price of $5, ⇒ in-the-money. Put on HHT with a strike-price of $62.92 ⇒ out-of-the-money
B. The expected return on HHT shares is 5.4% and the expected return on the protective put position is 2.94%.
How did we calculate the expected return?The expected return of HHT shares can be calculated by multiplying the outcomes by their respective probabilities and then summing these results.
Expected return = (0.77 × 10%) + (0.23 × -10%) = 7.7% - 2.3% = 5.4%.
If the HHT shares increase by 10%, the scenario remains the same, the new stock price will be
$48.68 × 1.10 = $53.55,
and the return from the position will be the increase in the stock price minus the cost of the put
(($53.55 - $48.68) / $48.68) - $1/$48.68 = 7.18%.
If the HHT shares decrease by 10%, the new stock price will be
$48.68 × 0.90 = $43.81.
Since the stock price is still above the strike price of the put, the put option won't be exercised, and the return from the position will simply be the decrease in the stock price minus the cost of the put
(($43.81 - $48.68) / $48.68) - $1/$48.68 = -11.27%.
The expected return on the protective put position is the probability-weighted average of these returns:
Expected return = (0.77 × 7.18%) + (0.23 × -11.27%)
= 5.53% - 2.59%
= 2.94%.
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A business truck was purchased on January 10, 2013 for $80,000, with an estimated life of 10 years and a residual value of $15,000. It was sold on March 31, 2021 for $25,000 cash. (Assume all appropriate entries for depreciation had been made for the first eight years of use - 2013 through 2020, but not for the partial year in 2021.) Journalize the following entries: (a) Journalize the partial year depreciation as of the day of the sale (March 31st), using the straight-line method. (b) Journalize the sale of the equipment. Format: Use the Chart of Accounts to enter correct account name. Enter debits and credits as whole numbers WITH COMMAS, but NO DECIMALS OR DOLLAR SIGNS! Date Mar 31 Mar 311 Account Name Debit 100 Credit D
(a) To journalize the partial year depreciation as of the day of the sale (March 31st) using the straight-line method, we need to calculate the depreciation expense for the partial year.
Given:
Purchase price: $80,000
Estimated life: 10 years
Residual value: $15,000
Depreciation per year = (Purchase price - Residual value) / Estimated life
Depreciation per year = ($80,000 - $15,000) / 10 = $6,500
Since the equipment was used for the first eight years, the total depreciation for those years would be 8 years * $6,500 = $52,000.
For the partial year in 2021 (January 1st to March 31st), we need to calculate the depreciation expense.
Partial year depreciation = Depreciation per year * (Number of days in the partial year / Number of days in a year)
Partial year depreciation = $6,500 * (90 / 365) = $1,602.74 (rounded to the nearest cent)
Journal entry for the partial year depreciation on March 31st:
Date: March 31
Account Name Debit Credit
Depreciation Expense $1,602
Accumulated Depreciation $1,602
(b) To journalize the sale of the equipment on March 31st, we need to record the cash received and remove the equipment and its accumulated depreciation from the books.
Journal entry for the sale of the equipment on March 31st:
Date: March 31
Account Name Debit Credit
Cash $25,000
Accumulated Depreciation $52,000
Equipment $80,000
Gain on Sale of Equipment $3,000
Explanation:
- Cash is debited with the amount received from the sale, which is $25,000.
- Accumulated Depreciation is credited with the total depreciation amount accumulated over the years, which is $52,000.
- Equipment is debited with its original cost, which is $80,000.
- Gain on Sale of Equipment is credited with the difference between the cash received and the net book value of the equipment. In this case, it is the residual value minus the accumulated depreciation: $15,000 - $52,000 = $3,000.
By recording these journal entries, we properly account for the partial year depreciation and the sale of the equipment on March 31, 2021.
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Choose any schedule 3C Public Institutions of your choice and perform the following task:
N.B – Please note that Public Finance Management Act (PFMA) provides a classification of all public entities in terms of their schedules Provide a high-level description of the institution and with the aid of a diagram, critically analyse the parties to corporate governance as it pertains to that entity.
The selected public institution for the purpose of this task is the South African Social Security Agency (SASSA).What is the South African Social Security African Social Security Agency (SASSA) is a public entity that is responsible for the distribution of social grants on behalf of the South African Government.
The social grants help to improve the standard of living of people in the country who are considered poor and vulnerable. SASSA is accountable to the South African Government's Department of Social Development and is classified under Schedule 3C of the Public Finance Management governance parties at the South African Social Security Agency parties to corporate governance at SASSA include the following:1.
Board of DirectorsThe SASSA board of directors is responsible for ensuring that the organization operates in accordance with the relevant laws and regulations. The board is also responsible for ensuring that the organization achieves its objectives and protects the interests of its stakeholders. The board is accountable to the Minister of Social Development.2. Executive ManagementThe executive management team is responsible for the day-to-day operations of SASSA. The team is accountable to the board of directors.3. ShareholdersThe shareholders of SASSA are the citizens of South Africa. The organization is funded by taxpayers' money, and therefore the citizens have an interest in ensuring that the organization.
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Which of the following is true about the equilibrium real output in the aggregate demand-aggregate supply (AD-AS) model in the short run?
Equilibrium real output can be above, equal to, or below full employment.
Correct. Short-run equilibrium in the (AD-AS) model occurs when the aggregate demand and short-run aggregate supply curves intersect. This can occur below, above or at the long-run aggregate supply curve. Therefore equilibrium real output can be below, above, or at full employment in the short run.
Equilibrium real output in the AD-AS model can be above, equal to, or below full employment.
In the short run, equilibrium occurs when the aggregate demand and short-run aggregate supply curves intersect. This intersection can happen at any level—below, above, or at the long-run aggregate supply curve. Therefore, the economy can operate below full employment (a recessionary gap), at full employment, or even beyond full employment (an inflationary gap) in the short run. These different outcomes reflect the dynamics of aggregate demand and supply, which can result in variations in output levels relative to the long-run potential output of the economy.
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For each of the following produces, explain whether the change in the market price and quantity sold reflects a shift in supply or a shift in demand and in what direction. Product Prices Quantity sold Supply or demand curve shift? Direction? Sales of ice cream after doctors Up Up confirm that it is really good for your health Mobile data after Down Up technology becomes cheaper Up Down Salmon after we completely pollute the ocean down down Sales of CBS All Access if their new Star Trek shows are bad 20°C
For each of the given produces, the change in the market price and quantity sold reflects a shift in supply or a shift in demand and in what direction can be drawn from the demand curve, which is shown in the next paragraph below.
Let's consider each scenario one by one:
1. Sales of ice cream after doctors confirm that it is really good for your health-
Increase in the demand for ice cream due to the positive reports from doctors will lead to a shift in the demand curve towards the right (from D1 to D2) which results in the increase in both market price and quantity sold.Quantity increases from Q1 to Q2 and price increases from P1 to P2.2. Mobile data after technology becomes cheaper-
If technology becomes cheaper, the supply of mobile data will increase. The increase in supply will lead to a shift in the supply curve towards the right (from S1 to S2) which results in a decrease in market price and increase in quantity sold.Quantity increases from Q1 to Q2 and price decreases from P1 to P2.3. Salmon after we completely pollute the ocean-
The pollution of the ocean will make it difficult to catch fish and hence supply will decrease. This decrease in supply will lead to a shift in the supply curve towards the left (from S1 to S2) which results in an increase in market price and decrease in quantity sold.Quantity decreases from Q1 to Q2 and price increases from P1 to P2.4. Sales of CBS All Access if their new Star Trek shows are bad-
If the new Star Trek shows are bad, the demand for CBS All Access will decrease. This decrease in demand will lead to a shift in the demand curve towards the left (from D1 to D2) which results in a decrease in market price and quantity sold.Quantity decreases from Q1 to Q2 and price decreases from P1 to P2.To know more about demand curve, visit the link : https://brainly.com/question/1139186
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why is a company's owner's equity important for investors and
landers?
The owner's equity of a company is important for both investors and lenders because it signifies the amount of money that would be left over for gravity shareholders if all the company's assets were liquidated and all its liabilities were paid off. Owner's equity is the amount of money.
That the owner of a business would be left with if all of the business's assets were liquidated and all of its debts were paid off. The owner's equity of a company is made up of the original investment of the owner(s) plus any profits that have been retained by the company rather than distributed as dividends.
The owner's equity is a key financial indicator because it represents the value of the company that is owned by shareholders. The owner's equity is an important metric for investors because it helps them understand the value of their investment in the company. If the owner's equity is high, it suggests that the company is in a strong financial position, which can increase investor confidence.
High owner's equity can also suggest that the company is retaining profits and investing in future growth, which can lead to higher dividends or a higher stock price in the future. If the owner's equity is low, it may suggest that the company is not profitable or has significant debt, which can be a red flag for investors. The owner's equity is also important for lenders because amount of money that would be left over for shareholders if the company was liquidated.
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On January 1, 2010, Hamad Town Co purchased a machine to $240 000 estimated that the machine will have a 10-your usef Meror 100,000 uns vers une tegev $20.000 Assuming the company produced 12,000 units in 2010 Depreciation expence for the year ended December 31, 2010 ug units of production method of deprecation would be A. None of these answers B. $22.000 C. $20,400 D. $40,000
The correct answer is not provided in the given options. The depreciation expense for the year ended December 31, 2010, using the units of production method, is $26,400.
To calculate the depreciation expense for the year ended December 31, 2010, using the units of production method, we need to determine the depreciation cost per unit and multiply it by the number of units produced in that year.Given that the machine was purchased for $240,000 and it is estimated to have a 10-year useful life with a salvage value of $20,000, we can calculate the depreciable cost as follows:
Depreciable Cost = Purchase Cost - Salvage Value
Depreciable Cost = $240,000 - $20,000
Depreciable Cost = $220,000
Now, we need to calculate the depreciation cost per unit. We divide the depreciable cost by the estimated total units of production over the machine's useful life. In this case, the estimated total units of production over 10 years is 100,000 units.
Depreciation Cost per Unit = Depreciable Cost / Total Units of Production
Depreciation Cost per Unit = $220,000 / 100,000
Depreciation Cost per Unit = $2.20
To find the depreciation expense for the year 2010, we multiply the depreciation cost per unit by the number of units produced in that year, which is 12,000 units.
Depreciation Expense = Depreciation Cost per Unit * Number of Units Produced
Depreciation Expense = $2.20 * 12,000
Depreciation Expense = $26,400
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On November 10 of the current year, Cherokee Industries sold materials to a customer for $8,000 with credit terms 2/10, n/30. Cherokee uses the net method of accounting for cash discounts. What entry would Cherokee make on November 17, assuming the correct payment was received on that date?
Select one:
a. Option a
b. Option d
c. Option b
d. Option c
To determine the entry that Cherokee Industries would make on November 17, we need to consider the credit terms and the method of accounting for cash discounts.
The credit terms given are 2/10, n/30. This means that the customer is offered a 2% discount if payment is made within 10 days, and the full amount is due within 30 days.
Cherokee Industries uses the net method of accounting for cash discounts. Under this method, the sales revenue is recorded at the net amount after deducting any cash discounts that may be taken by the customer.
Since the correct payment was received on November 17, which is within the discount period of 10 days, Cherokee Industries would record the entry to reflect the receipt of the payment with the cash discount taken by the customer.
The correct entry would be:
Option b. Debit: Accounts Receivable (full amount) $8,000
Credit: Sales Revenue (net amount) $7,840
Credit: Cash (amount received) $7,840
This entry reflects the reduction in sales revenue by the amount of the cash discount taken by the customer, and the receipt of the remaining amount in cash.
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