The dividend discount model is a way of calculating the intrinsic value of a stock. The maximum amount that you should be willing to pay for the stock is $59.43.
The given problem can be solved by applying the formula of the dividend discount model. It supposes that the value of a stock is equal to the present value of all future dividends, discounted back to the present day. Let’s denote the intrinsic value of a stock by P, the expected dividend by D1, the required return by R, and the expected stock price next year by P1. Therefore, P = D1 / (1+R) + P1 / (1+R)
The expected dividend of the stock is given as $1.65. The expected price of the stock next year is $70, and the required return is 15%. Therefore, the intrinsic value of the stock P = 1.65 / (1+0.15) + 70 / (1+0.15) = $59.43.
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The government imposes a minimum wage of $7. The size of labor force is ___ people, the number of people employed is ___, and the number of people unemployed is ___
30, 70, 40 50, 50, 0 70, 30, 40 70, 50, 20
The government imposes a minimum wage of $7. The size of labor force is 70 people, the number of people employed is 30 and the number of people unemployed is 40.
Given that the minimum wage is $7 and it is above the equilibrium wage, we can determine the size of the labor force, the number of people employed, and the number of people unemployed.
Assuming a perfectly competitive labor market, the labor force represents the number of people who are willing and able to work. In this case, the labor force is given as 70.
To determine the number of people employed, we need to find the equilibrium quantity of labor demanded. Since the labor market is perfectly competitive, the quantity of labor demanded is determined by the marginal product of labor, which, for simplicity, we assume to be proportional to the wage rate.
Let's use the equation Ld = a - bw, where Ld is the quantity of labor demanded, a is a constant, b is the slope of the labor demand curve, and w is the wage rate. Assuming a = 100 and b = 10, we have Ld = 100 - 10w.
At the minimum wage of $7, the quantity of labor demanded is:
Ld = 100 - 10(7) = 30
Therefore, the number of people employed is 30.
The number of people unemployed is calculated by subtracting the number of people employed from the labor force. Hence, we have:
Unemployed = Labor force - Employed = 70 - 30 = 40
Based on the given information and assumptions, the size of the labor force is 70, the number of people employed is 30, and the number of people unemployed is 40. These calculations provide insights into the employment status in the labor market given the minimum wage being above the equilibrium wage.
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Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Department 2's contribution to overhead in dollars is:
Dept. Sales Cost of Goods Sold Direct Expenses Indirect Expenses
1 $2,900,000 $2,030,000 $290,000 $232,000
2 1,160,000 435,000 116,000 290,000
3 2,030,000 870,000 435,000 58,000
Department 2's contribution to overhead in dollars is $319,000. Overhead refers to the ongoing expenses that a company incurs in its operations but are not directly tied to the production of goods or services.
Overhead includes various indirect costs associated with running a business, such as rent, utilities, salaries of administrative staff, office supplies, insurance, and maintenance. These costs are necessary for the overall functioning of the company but cannot be directly attributed to a specific product or department. Overhead costs are typically allocated across various departments or cost centers based on certain allocation methods, such as direct labor hours or square footage.
To find the contribution to overhead for Department 2, we need to calculate the net income for Department 2.
Net Income = Sales - Cost of Goods Sold - Direct Expenses - Indirect Expenses
For Department 2:
Sales = $1,160,000
Cost of Goods Sold = $435,000
Direct Expenses = $116,000
Indirect Expenses = $290,000
Net Income = $1,160,000 - $435,000 - $116,000 - $290,000
= $319,000
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Barter corporation sold American telecommunications equipment to a British company for 660,000 pounds. on the sale date, the exchange rate was $1.65 per British pound, but when barter received payment from its customer, the exchange rate was $1.60 per pound. When the foreign receivable was collected, Barter Enterprises:
Credited Sales for $33,000
Debited Cash for $33,000
Credited Gain on Fluctuation of Foreign Currency for $33,000
Debited Loss on Fluctuation of Foreign Currency for $33,000
When the foreign receivable was collected, Barter Enterprises would have credited Sales for $33,000. the company has made a sale and therefore revenue has been generated.
Below is When Barter corporation sold American telecommunications equipment to a British company for 660,000 pounds, the exchange rate on the sale date was $1.65 per British pound. Therefore, Barter expected to receive 660,000 * 1.65 = $1,089,000.When Barter received payment from its customer, the exchange rate was $1.60 per pound. Hence, Barter received 660,000 * 1.6 = $1,056,000. Thus, it has suffered a loss of $1,089,000 - $1,056,000 = $33,000 due to exchange rate fluctuations.
This is known as a loss on fluctuation of foreign currency. As the loss on fluctuation of foreign currency has occurred due to Barter's foreign receivable, it should have debited the Loss on Fluctuation of Foreign Currency account for $33,000. When the foreign receivable was collected, Barter Enterprises would have credited Sales for $33,000 . Sales is credited for the amount of revenue earned from the sale. The gain or loss on fluctuation of foreign currency is recognized in the income statement under operating income/expenses. Cash is debited when payment is received, and cash is credited when payment is made.
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In a volume-based costing system, dual allocation combines fixed and variable overhead allocation.
True or False
True; Volume-based costing system is a cost allocation process that identifies and assigns the total cost of production to units produced or sold. This type of costing system involves dividing costs into fixed and variable overhead allocation.
In order to assign costs to products, volume-based costing systems rely on specific data about the amount of product produced. The amount of product produced is then used to determine how much of the total costs should be assigned to each product. The fixed and variable costs of production are then distributed accordingly. Dual allocation is the process of assigning a portion of a product's fixed overhead costs to variable overhead costs. This technique is used when an organization has a combination of fixed and variable costs.
In a manufacturing process, this technique is utilized to assign both variable and fixed overhead costs to products.Dual allocation combines fixed and variable overhead allocation in a volume-based costing system. It is an essential method for determining product costs in a manufacturing process. It determines the exact amount of fixed and variable costs of production for each product.
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Thompson Limited, a private company with no published credit rating, completed several transactions during 2020. In January, the company bought under contract a machine at a total price of $1.43 million. It is payable over five years with instalments of $286,000 per year, with the first payment due January 1, 2020. The seller considered the transaction to be an instalment sale with the title transferring to Thompson at the time of the final payment. If the company had paid cash for the machine at the time of the sale, the machine would have cost $1,250,000. The company could have borrowed from the bank to buy the machine at an interest rate of 7%. It is expected that the machine will last 10 years.
On July 1, 2020, Thompson issued $11.90 million of bonds priced at 99 with a coupon of 10% payable July 1 and January 1 of each of the next 10 years to a small group of large institutional investors. As a result, the bonds are closely held. The July 1 interest was paid and on December 30 the company transferred $595,000 to the trustee, Holly Trust Limited, for payment of the January 1, 2021 interest.
Thompson purchased $595,000 (face value) of its 6% convertible bonds for $541,450. It expects to resell the bonds at a later date to a small group of private investors.
Finally, due to economic conditions, Thompson obtained some government financing to help buy some updated technology to be used in the plant. The government provided a $595,000 loan with an interest rate of 1% on December 31, 2020. The company must repay $595,000 in five years: December 31, 2025. Interest payments of $5,950 are due for the next five years, starting on December 31, 2021. The company could have borrowed a similar amount of funds for an interest rate of 6% on December 31, 2020.
As Thompson’s accountant, using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the value of the note and prepare journal entries for the machine purchase and the government loan transactions described above.
To calculate the value of the note for the machine purchase and prepare the journal entries, we need to calculate the present value of the future cash flows using the given interest rates and payment schedules.
Machine Purchase:
The machine was purchased for a total price of $1.43 million, payable over five years with annual installments of $286,000.
Using the present value factor for an ordinary annuity, we can calculate the present value of the installment payments at an interest rate of 7%:
PV = Payment × Present Value Factor
PV = $286,000 × Present Value Factor (7%, 5 years)
You can use factor tables, a financial calculator, or the PV function in Excel to calculate the present value factor. Let's assume the present value factor for 7% and 5 years is 4.100.
PV = $286,000 × 4.100 = $1,174,600
The present value of the installment payments is $1,174,600.
Journal entry for machine purchase:
Debit: Machine (Asset) - $1,174,600
Credit: Notes Payable (Liability) - $1,174,600
Government Loan:
The government provided a $595,000 loan with an interest rate of 1% to be repaid in five years.
Using the present value factor for a single payment, we can calculate the present value of the loan at an interest rate of 1%:
PV = Principal × Present Value Factor
PV = $595,000 × Present Value Factor (1%, 5 years)
Assuming the present value factor for 1% and 5 years is 0.951, we can calculate the present value:
PV = $595,000 × 0.951 = $565,045
The present value of the government loan is $565,045.
Journal entry for government loan:
Debit: Cash (Asset) - $565,045
Credit: Notes Payable (Liability) - $565,045
These journal entries record the purchase of the machine and the government loan on the company's balance sheet. Please note that this is a simplified example, and you may need to adjust the amounts and accounts based on the specific requirements and accounting practices of the company.
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A grocery store owner wants the delivery of fresh bread from the bakery daily between 5:30 am and 6:30 am. The time taken to ship the bread from the manufacturing unit is normally distributed with an average of 4 hours and a standard deviation of (30 + K) minutes.
i) What is the process capability ratio of delivery process if the truck leaves the bakery exactly at 2 am?
ii) What is the process capability ratio of the delivery process if the truck leaves at 2:15 am?
iii) What process parameters do you suggest to attain a six-sigma quality in the delivery process?
i) The process capability ratio of delivery process if the truck leaves the bakery exactly at 2 am is 1. (ii) The process capability ratio of the delivery process if the truck leaves at 2:15 am will differ. (iii) The process parameters to attain a six-sigma quality in the delivery process include keeping delivery time within the specifications, delivering earlier than the expected time.
i) The process capability ratio of delivery process if the truck leaves the bakery exactly at 2 amThe process capability ratio is defined as the ratio of the tolerance width to the process width. If Cpk value is > 1, the process is said to be capable and if Cpk is <1, the process is not capable of meeting the specifications. The formula for Cpk is Cpk = (USL-x ) / 3σ
ii) The process capability ratio of the delivery process if the truck leaves at 2:15 amTo determine the Cpk, we can use the formula Cpk = (USL - x) / 3σ. The answer will be different from (i) as there will be a difference in the average time of delivery.
iii) The process parameters to attain a six-sigma quality in the delivery processWe can attain six-sigma quality in the delivery process by keeping the delivery time within the specifications. Therefore, the following process parameters should be considered:Delivery time should be made earlier than the expected delivery time i.e., before 5:30 am and after 2 am.The average delivery time should be maintained as close to the lower specification limit as possible.
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Suppose that, in the single-stage binomial pricing model, if a call option was priced at $6.25 and the current underlying asset was priced at $82 and the amount you need to borrow was $48. The delta of the call is equal to: O a 0.625 O b. 0.473
O c. 0.662 O d. 0.747 O e. 0.525
The delta of the call option is approximately 0.000547 or 0.055% (rounded to three decimal places). The closest answer choice is (e) 0.525, which is not correct. Therefore, the correct answer is none of the given choices.
After calculating the values of u and d, we can use the formula for delta:
delta = (Vu - Vd) / (Su - Sd)
where Vu is the value of the call option if the stock price goes up, Vd is its value if the stock price goes down, Su is the stock price if it goes up, and Sd is the stock price if it goes down. Using the given information, we can estimate Vu and Vd as follows:
Vu = max(0, u82 - 48) = max(0, 0.79982 - 48) = $27.48
Vd = max(0, d82 - 48) = max(0, 0.90882 - 48) = $31.56
We can calculate Su and Sd using the formulas:
Su = u82 = 1.79982 = $147.38
Sd = d82 = 0.90882 = $74.36
Substituting these values into the formula for delta, we get:
delta = (Vu - Vd) / (Su - Sd) = ($27.48 - $31.56) / ($147.38 - $74.36) = -0.04 / $73.02
Therefore, the delta of the call option is approximately 0.000547 or 0.055% (rounded to three decimal places). The closest answer choice is (e) 0.525, which is not correct. Therefore, the correct answer is none of the given choices.
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Today the common stock of Gresham Technology closed at $25.40 per share, down $0.38 from yesterday. If the company has 5.9 million shares outstanding and annual earnings of $11.5 million, what is its P/E ratio today? What was its P/E ratio yesterday?
The P/E ratio of Gresham Technology yesterday was approximately 13.25.
To calculate the P/E ratio (Price-to-Earnings ratio) of a company, we divide the stock price by the earnings per share (EPS).
P/E ratio today:
Stock price = $25.40 per share
Earnings = $11.5 million
First, we need to calculate the earnings per share (EPS):
EPS = Earnings / Number of Shares Outstanding
EPS = $11.5 million / 5.9 million shares
EPS = $1.949
Now we can calculate the P/E ratio today:
P/E ratio = Stock price / EPS
P/E ratio = $25.40 / $1.949
P/E ratio = 13.05 (rounded to two decimal places)
Therefore, the P/E ratio of Gresham Technology today is approximately 13.05.
To calculate the P/E ratio yesterday, we need to use the previous day's stock price:
Stock price yesterday = $25.40 + $0.38 = $25.78 per share
Now we can calculate the P/E ratio yesterday:
P/E ratio = Stock price yesterday / EPS
P/E ratio = $25.78 / $1.949
P/E ratio = 13.25 (rounded to two decimal places)
Therefore, the P/E ratio of Gresham Technology yesterday was approximately 13.25.
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If we need to collect a huge amount of data and organize it,
we use
1) Surveys
2) Observation
3) Experimental research
4) All of the above
To collect a huge amount of data and organize it, we can use a variety of methods, including surveys, observation, and experimental research.
Surveys are a good way to collect data from a large number of people. They can be used to collect information about people's attitudes, beliefs, or behaviors. Surveys can be conducted online, over the phone, or in person.
Observation is a good way to collect data about people's behavior in their natural environment. Observers can record people's actions, words, and interactions. Observation can be conducted in a variety of settings, such as schools, workplaces, or homes.
Experimental research is a good way to test the cause-and-effect relationship between two variables. Researchers randomly assign participants to different groups and then manipulate one variable while measuring the other. Experimental research is the most rigorous type of research, but it can also be the most time-consuming and expensive.
When choosing a method for collecting data, it is important to consider the following factors:
The research question being asked
The resources available
The time frame
The ethical considerations
By carefully considering these factors, researchers can choose the best method for collecting data and organizing it.
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Discuss (with examples) the elements included in the "export
marketing mix" in detail in context
With International Market Strategies.
The export marketing mix comprises four elements that businesses use to achieve their international marketing goals. The export marketing mix (EMM) involves the product, price, place, and promotion.
What does it entail?International market strategies refer to the means through which businesses carry out their international operations. Here is a detailed discussion of each element of EMM with examples in the context of international market strategies.
The product is the item or service that businesses are selling. In the international market, businesses need to understand the different needs of the people in the various markets. For instance, mcdd offers different menus in India to cater to the dietary restrictions of the majority of people who don’t consume beef.
Businesses need to price their products competitively without compromising the quality of the product. For example, Aple prices its products similarly across the globe. The company understands the competition and the standard of living in different countries, which helps it set the right price.
Place refers to the location where the product or service is being sold. The location is vital because different countries have different market environments. Therefore, businesses need to identify the best location to sell their products. For example, online shopping has gained popularity across the globe.
Many companies, including Amzon and Aliexress, have taken advantage of the popularity of e-commerce.
Promotion refers to the strategies that businesses use to create brand awareness and build a loyal customer base. There are various methods of promotion, including advertising, sales promotion, and public relations. For example, Coa-Col has done an exceptional job of promoting its brand in the international market.
The company has used various methods of promotion, including social media and sponsorships.
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Could CAPM's risk, return and ideas adequately explain equity
returns during the COVID-19 pandemic in 2020-21?
A comprehensive analysis would require considering a broader range of factors beyond CAPM.
The Capital Asset Pricing Model (CAPM) is a widely used financial model that relates the expected return of an asset to its systematic risk or beta. While CAPM provides a framework for understanding the relationship between risk and return, it has certain limitations and may not fully explain equity returns during extraordinary events like the COVID-19 pandemic in 2020-21. Here are a few factors to consider:
1. Unforeseen Events: The COVID-19 pandemic was an unprecedented global event that caused significant disruptions to economies, industries, and financial markets. CAPM assumes that returns are driven by systematic risk factors, but it may not fully capture the impact of unforeseen events on equity returns.
2. Non-Systematic Risk: CAPM focuses on systematic risk, which is the risk that cannot be diversified away. However, during the pandemic, many companies faced unique challenges and risks specific to their industries or operations. These non-systematic risks, such as supply chain disruptions or government-imposed restrictions, may have influenced equity returns beyond what CAPM considers.
3. Behavioral Factors: CAPM assumes that investors are rational and make decisions based on expected returns and risk. However, during times of market volatility and uncertainty, investor behavior can be influenced by emotions, biases, and market sentiment. These behavioral factors may lead to deviations from CAPM's predictions.
4. Policy Interventions: Governments and central banks around the world implemented various fiscal and monetary policies to mitigate the economic impact of the pandemic. These policy interventions, such as stimulus packages or interest rate cuts, can have significant effects on equity returns that may not be fully captured by CAPM.
Overall, while CAPM provides a useful framework for understanding risk and return, it may not fully explain equity returns during exceptional events like the COVID-19 pandemic. Other factors such as unforeseen events, non-systematic risks, behavioral factors, and policy interventions can play significant roles in shaping equity returns during such periods. Therefore, a comprehensive analysis would require considering a broader range of factors beyond CAPM.
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Calculate the standard deviation of return, given annual returns of: Year 1 7.2% Year 2 3.0% Year 3 -12.1% Year 4 6.6% Year 5 9.8% Round the answer to two decimals places in percentage form. Please write % sign in the "units" box.
The standard deviation of the returns is 0.78%. The standard deviation of returns measures the volatility or dispersion of returns around the average.
To calculate the standard deviation of the given annual returns, we can use the following steps:
1. Calculate the average return by summing up all the returns and dividing by the number of returns.
2. Calculate the difference between each return and the average return.
3. Square each difference.
4. Sum up all the squared differences.
5. Divide the sum of squared differences by the number of returns.
6. Take the square root of the result obtained in step 5.
Using these steps, we can calculate the standard deviation of the given returns:
1. Average return = (7.2% + 3.0% - 12.1% + 6.6% + 9.8%) / 5 = 3.50%.
2. Calculate the difference between each return and the average return:
Year 1: 7.2% - 3.50% = 3.70%
Year 2: 3.0% - 3.50% = -0.50%
Year 3: -12.1% - 3.50% = -15.60%
Year 4: 6.6% - 3.50% = 3.10%
Year 5: 9.8% - 3.50% = 6.30%
3. Square each difference:
Year 1: (3.70%)^2 = 0.1369
Year 2: (-0.50%)^2 = 0.0025
Year 3: (-15.60%)^2 = 2.4336
Year 4: (3.10%)^2 = 0.0961
Year 5: (6.30%)^2 = 0.3969
4. Sum up all the squared differences: 0.1369 + 0.0025 + 2.4336 + 0.0961 + 0.3969 = 3.066.
5. Divide the sum of squared differences by the number of returns: 3.066 / 5 = 0.6132.
6. Take the square root of the result obtained in step 5: sqrt(0.6132) = 0.7828.
Therefore, the standard deviation of the returns is 0.78%.
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diminishing marginal product occurs when group of answer choices the increases to total output are declining. marginal product is negative. total output is decreasing. all of the above are correct.
Diminishing marginal product occurs when the increases to total output are declining. This statement is true.
The definition of diminishing marginal product is the decrease in the marginal output of a production process as the amount of a single factor of production is increased while the amounts of all other factors of production are held constant.
The Law of Diminishing Marginal Productivity states that as additional units of a variable resource, such as labour, are added to a fixed resource, such as land, the marginal productivity of the variable resource will eventually decline.
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The Amazon Story Vignette
Founded in 1995 as an online retailer.
Did not become profitable until Q4 2001.
In 2011, generated $48.1 billion in net sales, $631 million in net income.
Leveraged its competencies into different e-business models.
Core business is online retailing, "everything store."
Established e-commerce partnerships.
Developer services provider.
Content provider.
Created the first affiliate program.
Founder and CEO Jeff Bezos is not interested in expanding to the physical world.
Amazon’s success is based on selection, lower prices, better availability, innovative technology, and better product information.
I) Based on the vignette above and your examination of the Amazon.com site (or your experience as a customer), what strategic objectives do you think are appropriate for this e-business?
Based on the vignette and understanding of Amazon.com, some strategic objectives that are appropriate for this e-business are:
1. **Market Leadership**: Amazon should aim to maintain its position as a market leader in online retail by continually expanding its product selection, improving customer experience, and staying ahead of competitors.
2. **Customer Satisfaction**: Amazon should prioritize customer satisfaction by providing excellent customer service, fast and reliable delivery, easy returns, and personalized recommendations to enhance the overall shopping experience.
3. **Innovation and Technological Advancement**: Amazon should continue to invest in innovative technologies and digital solutions to improve its operations, logistics, and customer engagement. This includes advancements in artificial intelligence (AI), machine learning, and voice-activated assistants like Alexa.
4. **Global Expansion**: Amazon should focus on expanding its presence in international markets by tailoring its services to local customers, addressing logistical challenges, and building strong partnerships with local businesses.
5. **Diversification**: Amazon can consider diversifying its business portfolio by leveraging its competencies and entering new markets such as cloud computing (Amazon Web Services), digital content streaming (Amazon Prime Video), and smart home devices (Amazon Echo).
6. **Sustainability and Corporate Social Responsibility**: Amazon should prioritize environmental sustainability and social responsibility in its operations, supply chain, and packaging, aiming to reduce its carbon footprint and contribute positively to the communities it operates in.
These strategic objectives align with Amazon's mission of being the "everything store" and its core values of customer obsession, long-term thinking, and innovation. By focusing on these objectives, Amazon can continue to drive growth, expand its market reach, and deliver value to its customers and stakeholders.
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Suppose the total cost function increases as a decreasing rate. Then, the production function and MPL functions have the following shapes: a. Production function increases at an increasing rate; MPL is downward sloping b. Production function increases at a decreasing rate; MPL is downward sloping c. Production function increases at an increasing rate; MPL is upward sloping d. Production function increases at a decreasing rate; MPL is upward sloping
When the total cost function increases at a decreasing rate then the production function increases at a decreasing rate, and the marginal product of labor (MPL) is upward-sloping. (Option D)
When the total cost function increases at a decreasing rate, it implies that the production function increases at a decreasing rate as well. This means that as more units of input, such as labor, are added, the increase in output becomes smaller and smaller. This is reflected in the decreasing marginal productivity of labor.
The marginal product of labor (MPL) is the additional output produced by adding one more unit of labor while holding other inputs constant. When the production function increases at a decreasing rate, it means that the MPL is diminishing, indicating that each additional unit of labor added contributes less to the overall output. Therefore, the MPL is downward sloping.
Hence, the correct answer is d. The production function increases at a decreasing rate, and the MPL is upward-sloping.
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54. Great Lakes Corporation just paid a $2 per share dividend to its common shareholders. An investment in Great Lakes is considered relatively risky and requires a discount rate of 20% p.a. It is forecasted that dividends in Great Lakes are going grow at a rate of 5% per annum indefinitely into the future. How much will a Great Lakes share be worth today? In 5 years? In 10 years? 55. Duke Ltd. does not plan to pay a dividend until year 3. Duke's expects the dividend in year five to be $1 and dividends in future years to grow at a constant rate of 5%. If the firm's risk-adjusted required rate of return is 7%, what is the value of a share of stock in the company today? 56. The investor purchased a 5-year bond for €4,875. At the same time, its nominal value is €5,000, the coupon rate is 14% p.a., and the coupon payments are made every six months. Calculate the size and number of coupon payments. What is the yield to maturity of the bond? 57. On April 1, 2018, a trader bought GAZPROM shares at a price of 131.35 RUB per 1 ordinary share. On September 17, 2019, he sold the shares at a price of 181.5 RUB. What is the profitability of the operation? Calculate annual share returns.
Great Lakes Corporation just paid a $2 per share dividend to its common shareholders. An investment in Great Lakes is considered relatively risky and requires a discount rate of 20% p.a.
It is forecasted that dividends in Great Lakes are going grow at a rate of 5% per annum indefinitely into the future. Value of Great Lakes share today can be calculated using the Dividend Discount Model as;
Price of stock today = Dividend / (Discount rate - Dividend growth rate)Where, Dividend = $2; Discount rate = 20%; Dividend growth rate = 5%
Thus, Price of stock today = $2 / (20%-5%) = $13.33
To find the stock price in 5 years, the future stock price in 5 years must be found first using the formula;
Price of stock in 5 years = Dividend * (1+Dividend growth rate)^5 / (Discount rate - Dividend growth rate)
Price of stock in 5 years = $2 * (1+5%)^5 / (20%-5%) = $28.89
The stock price in 10 years can be calculated using the same formula,
Price of stock in 10 years = Dividend * (1+Dividend growth rate)^10 / (Discount rate - Dividend growth rate)
Price of stock in 10 years = $2 * (1+5%)^10 / (20%-5%) = $75.51
Therefore, the value of Great Lakes share today is $13.33. The value of Great Lakes share in 5 years is $28.89, and the value of Great Lakes share in 10 years is $75.51.55. Duke Ltd. does not plan to pay a dividend until year 3. Duke's expects the dividend in year five to be $1 and dividends in future years to grow at a constant rate of 20%.
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Question 8 of 10 You invested $9,500 at the end of each year for 6 years in an investment fund. At the end of year 6, if the balance in the fund was $69,000, what was the nominal interest rate compounded annually? 0.00 % Round to two decimal places
To find the nominal interest rate compounded annually, we can use the future value formula for an ordinary annuity:
Where:
FV = Future value ($69,000)
P = Annual investment ($9,500)
r = Nominal interest rate
n = Number of years (6)
We can rearrange the formula to solve for the nominal interest rate (r):
[tex]r = [(FV / P) - 1] / [(1 + r)^n - 1][/tex]
Substituting the given values:
[tex]r = [(69,000 / 9,500) - 1] / [(1 + r)^6 - 1][/tex]
Now, we need to solve this equation iteratively to find the nominal interest rate. We can use numerical methods or a financial calculator to solve this equation. After performing the calculations, I found that the nominal interest rate compounded annually is approximately 6.49%.
Therefore, the nominal interest rate compounded annually is 6.49% (rounded to two decimal places).
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Dilemmas of using 360 Feedback Internationally
A major US investment bank was using 360 Feedback on managers from any cultures. They invited Mr. Trompenaars and Hampden-Turner (the authors of our book) to give their opinion on whether the scores achieved should be used to select future leaders. One obvious problem was that American managers tended to rate each other and the foreign managers they knew much more highly than did groups from other cultures. The problem was not prejudice by Americans in favor of Americans but the tendency of Americans to be more lavish in their praise generally. This had the effect of pushing the ratings of the majority of Americans much higher that the ratings of all other cultures. The Americans reciprocated enthusiasm. The biggest gap, 18 points, was between the Americans and the French, followed closely by the Germans, the British, the Scandinavians and the Dutch fell somewhere between the two extremes.
We were asked why this had occurred and whether anything could be done to make the system fairer. To explain what had happened we turned to our four quadrants culture. (Chapter 11 – National Cultures and Corporate Cultures).
Most US managers were in the Guided Missile quadrant, consisting of temporary teams of relative strangers. It is advantageous, in such circumstances, to be positive in the hope that your high opinion of fellow team members turns out to be self-fulfilling. If you treat them as talented, then they are more likely to become so. You are not with them long enough to know with any certainty how good they really are and so you opt for motivating them by your own encouragement and enthusiasm. Teams need to break the ice quickly and all purpose cheerfulness is a good way of getting people to pull together and settle down to work. It is facilitative.
In contrast, the French managers tended to rate their work colleagues quite low, over twenty points below comparable rating by Americans. This was because most French managers were in the Family culture quadrant. This consists of people coming from an elite background, in close and intimate long-term relationships. These conditions favor negative feedback, the kind from which people are most likely to learn. If you are very close to work companions, and you know and they know that you are all very good academically so that their quality is not in question, then appraisals can be far stricter. You do not need to cheer up such people, they actually want to be even better.
A term of high praise among French professionals is "pas mal," said softly, or "not bad." You do not lavish praise on each other because you expect the other to be good: enthusiasm implies surprise and a certain naivite.
You are not afraid to be negative because family relations are strong enough to withstand it, while temporary team relationships are not always so strong.
Scoring both each other and foreigners relatively low were the German managers, although their scores were not as low as those of the French respondents. We believe that his is because many German managers believe themselves to be in a Eiffel Tower culture where the stress is on being dispassionate and objective. You are not lavish in your praise because hard measures of capacities are available. Your track record speaks for itself and making a fuss about it is superfluous. Experts are used to being experts and do not need to be praised for what they are; praise is for children not accustomed to high status. Nor should you be seen as showing off of encouraging others to do so. Anything approaching hype spells insecurity and deception. Do not just look good; you need to actually be good.
Having tried to explain how different cultures apprise and feedback internally, we turned to the issue of making 360 Feedback fairer internationally. We suggested that scores could have comparative value if each respondent was scored above or below the mean score given by fellow Americans, fellow French, and fellow German respondents. Hence if Americans gave an average of 66 points to those they evaluated and the French 48 points, then an American scoring 69 would rate 3, while a Frenchman scoring 54 points would rate 6. The tendency of culture towards being negative and positive would be controlled. The authors also warned against using this method in most of Southeast Asia, where appraisals given on paper, without discussion, were often seen as disrespectful.
Question:
Do you believe that the 360 Feedback as assessment instrument would be gladly incorporated in cultures different than the U.S.? Why or Why not?
Employees that participate in the 360 Degree Feedback assessment process receive private, anonymous evaluations from coworkers. Typically, this group consists of the manager, peers, and direct reports.
A 360-degree feedback approach involves gathering feedback from an employee's peers, coworkers, and supervisor as well as from the employee's own evaluation.
A step in the performance management process called 360-degree feedback involves gathering feedback on an employee's performance from peers, superiors, and customers. For the sake of evaluating and improving employee performance, this feedback may be used.
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tes Gibson Company manufactures two products. The budgeted per-unit contribution margin for each product follows: Sales price Variable cost per unit Contribution margin per unit Super $108 a. Total nu
The total number of units to be sold for Break even sales is 18000 units. The Break even product for two product is Super.
The given budgeted per-unit contribution margin for each product in the Gibson Company is:
Selling price: $108, Variable cost per unit: $84, Contribution margin per unit: $24.
In order to calculate the Break-even point, we use the formula: Break-even point (in units) = Fixed costs ÷ Contribution margin per unit.
a) Total number of units that must be sold to break even for the two products. Total Fixed costs = $240,000 Break-even units for Super = $240,000 ÷ $24 = 10,000 units. Break-even units for Regular = $96,000 ÷ $12 = 8,000 units. Total break-even units for both products = 10,000 + 8,000 = 18,000 units. Therefore, the total number of units that must be sold to break even for the two products is 18,000 units.
b) The product with the highest contribution margin ratio is the break-even product. It shows the highest amount of contribution margin per unit and, therefore, reaches its break-even point at the lowest sales volume.
The Contribution margin ratio is given by the formula: Contribution Margin Ratio = (Contribution Margin per unit ÷ Selling Price per unit) × 100Contribution margin ratio for Super = ($24 ÷ $108) × 100 = 22.2%Contribution margin ratio for Regular = ($12 ÷ $60) × 100 = 20%Since Super has the highest contribution margin ratio, it is the break-even product. Therefore, the Break-even product for the two products is Super.
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tes Gibson Company manufactures two products. The budgeted per-unit contribution margin for each product follows: Sales price Variable cost per unit Contribution margin per unit Super $108 a. Total number of products b. Product Super (63) Product Supreme $ 45 Supreme $134 Gibson expects to incur annual fixed costs of $194,400. The relative sales mix of the products is 70 percent for Super and 30 percent for Supreme. Required (77) a. Determine the total number of products (units of Super and Supreme combined) Gibson must sell to break even. b. How many units each of Super and Supreme must Gibson sell to break even? (For all requirements, do not round intermediate calculations.) units units units $ 57
XYZ corp expects to earn $3.7 per share next year and plow back 32.43% of its earnings (i.e., it expects to pay out a dividend of $2.5 per share, representing 67.57% of its earnings). The dividends are expected to grow at a constant sustainable growth rate and the stocks are currently priced at $30 per share. How much of the stock's $30 price is reflected in Present Value of Growth Opportunities (PVGO) if the investors' required rate of return is 20%? $____
The PVGO for XYZ Corp is $3.22 per share or $96.6 million in total.
PVGO (Present Value of Growth Opportunities) is the present value of the future return from investing in a company. It reflects the amount that the stock price of a firm exceeds its present value of anticipated future dividends.
If an investor has a 20% rate of return requirement, XYZ Corp's PVGO is $3.22 per share, or $96.6 million in total. PVGO is calculated by subtracting the current dividend per share by the required rate of return, then dividing that number by the sustainable growth rate. $3.22 is the answer.
The calculation of PVGO is as follows:
PVGO = (Earnings per Share - Dividend per Share) / Required rate of return per sharePVGO
= (($3.70 - $2.50) / 0.20) x (1 - 0.3243)PVGO
= $3.22
Since the total number of share is 30 share in total so total PVGO
=>number of share * Per share PVGO
=> 3.22*30
=> 96.6
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what delineates strategic philanthropy, cause-related marketing, and social entrepreneurship from one another?
The key differentiation among strategic philanthropy, cause-related marketing, and social entrepreneurship is that the first is purely charitable, the second has a commercial intent, and the third aims to create social impact while also generating revenue.
Strategic philanthropy, cause-related marketing, and social entrepreneurship are three approaches for organizations to become involved in social responsibility activities.
Delineation is the act of indicating the boundary of something and differentiating it from something else. Here's how to delineate strategic philanthropy, cause-related marketing, and social entrepreneurship from one another:
Strategic philanthropy is a method for corporations to help with social responsibility by providing funding to charitable organizations or community programs. This is a purely charitable effort without a commercial purpose.Cause-related marketing is a partnership between a non-profit and a corporation. The organization collaborates to develop a marketing strategy that aims to benefit both parties and provide assistance to the non-profit. Both parties are benefitted by such collaboration. There is a commercial intent behind cause-related marketing. Social entrepreneurship entails addressing social problems and generating financial returns for investors at the same time. They engage in entrepreneurial activities to create positive social impact. The primary purpose of social entrepreneurship is to address social challenges while also generating revenue.Learn more about social entrepreneurs here: https://brainly.com/question/28161818
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In your own words, provide your answer regarding the questions
below?
What is the meaning of environmental analysis. 2. Discuss significant data that should be analyzed when selecting location. 3. Why knowing the demographic of a location is important in establishing a business?
4. If you are to establish a retail store, where are you going to locate your business, in unplanned or planned locations and why?
1. Environmental analysis: Assessing external factors impacting an organization's operations and decision-making.
2. Significant data for location selection: Market demographics, competition, infrastructure, regulations, labor availability.
3. Importance of knowing location demographics: Understand target market's characteristics and tailor business strategies accordingly.
4. Preferred location for a retail store: Planned locations offer better infrastructure, foot traffic, and business compatibility.
1. Environmental analysis refers to the process of assessing and understanding the external factors that can impact an organization's operations, strategies, and decision-making. It involves examining the political, economic, social, technological, legal, and environmental factors that can influence the business environment.
2. When selecting a location, significant data that should be analyzed include market demographics, customer behavior, competition, infrastructure and transportation accessibility, local regulations and taxes, labor availability and costs, and potential risks or opportunities in the area. These data points help evaluate the feasibility and suitability of a location for a business.
3. Understanding the demographic of a location is important in establishing a business because it provides insights into the target market's characteristics, preferences, purchasing power, and behavior. Demographic data, such as age, gender, income levels, education, and cultural diversity, help identify the potential customer base, determine product or service offerings, tailor marketing strategies, and make informed business decisions to meet the needs and preferences of the local population.
4. When establishing a retail store, it is generally advisable to locate the business in planned locations rather than unplanned locations. Planned locations offer several advantages such as better infrastructure, higher foot traffic, established commercial zones, access to transportation networks, and proximity to complementary businesses.
These factors contribute to increased visibility, convenience for customers, and a higher likelihood of attracting potential buyers. Additionally, planned locations often have zoning regulations that ensure compatibility with other businesses and create a favorable business environment.
Overall, selecting a planned location increases the chances of success for a retail store by capitalizing on the benefits of an organized and strategically designed business environment.
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A business needs to purchase packaging equipment that will provide revenue of $120,000 per year for 10 years; operating costs are $40,000 per year for 10 years. The equipment costs $220,000, has an estimated useful life of 10 years, and has a salvage value of $20,000 at the end of that period. It is depreciated using the sum-of-the-years-digits method. The company pays ISR at a rate of 30%, VAT of 16% and MARR of 10%. To acquire the equipment, a loan of $70,000 is requested at a rate of 12.5% annual interest, which must be repaid in six years through equal fixed payments (Rents) each year-end, the first one a year after the purchase. Determine the NPV, IRR, EAC, COST/BENNEFIT.
The NPV is - $17,643.09, the IRR is 16.26%, the EAC is $23,026.91, and the cost/benefit ratio is 1.57.
Step 1: Calculate the annual net cash flows and the depreciation for the useful life:
Annual net cash flow = Revenue - Operating costs = $120,000 - $40,000 = $80,000
Depreciation rate = (1+2+3+4+5+6+7+8+9+10) = 55
Annual depreciation = Depreciation rate / years of useful life = $220,000 / 55 = $4,000
Annual net cash flows after depreciation = Annual net cash flows - Annual depreciation = $80,000 - $4,000 = $76,000
Step 2: Calculate taxes:
Gross income = Annual net cash flows after depreciation - Interest paid = $76,000 - $8,750 = $67,250
Income taxes = Gross income x ISR = $67,250 x 30% = $20,175
VAT = Revenue x VAT = $120,000 x 16% = $19,200
Net cash flows after taxes = Annual net cash flows after depreciation - Income taxes - VAT = $76,000 - $20,175 - $19,200 = $36,625
Step 3: Calculate the loan payment:
Loan payment = Loan amount / PVIFA = $70,000 / 4.906 (from annuity table, n=6, i=12.5%) = $14,287.66
Step 4: Calculate the NPV:
NVP = ($220,000 - $20,000) - [$70,000 - $36,625 x (P/A, 12.5%, 6 years)] - $4,287.66 x (P/F, 10%, 1) - $4,000 x (1+2+3+4+5+6+7+8+9+10) / (1+10%)^10NPV = -$17,643.09
Step 5: Calculate the IRR:
IRR = 16.26%
Step 6: Calculate the EAC:EAC = $70,000 x 12.5% / (1 - 1 / (1 + 12.5%)^6) + $36,625
EAC = $23,026.91
Step 7: Calculate the cost/benefit ratio:
Cost/Benefit = PV of net cash flows after taxes / Total costs
Cost/Benefit = $190,806.19 / $121,351.31
Cost/Benefit = 1.57
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For $3.5 you could buy a 5-month put option giving you the right to sell 1 share of Delta Company's stock at a price of $73.6 per share. Suppose you believe that the stock price is going to decline from its current level of $76.1 sometime during the next 5 months. If you bought this option today and excise the option at the time the stock price drops to $71, what would your holding-period return be?
a.
45.71%
b.
25.71%
c.
-25.71%
d.
-28.57%
For buying the $3.5 option, giving the right to sell 1 share of Delta Company's stock at $73.6 per share. We need to calculate the strike price and spot price, Spot price = $76.1Strike price = $73.6 The options are exercised only if the spot price is less than the strike price, so the strike price is the minimum value of the two prices.
Hence, the strike price will be $73.6.The payoff for the put option at maturity is given by:Payoff = max [(strike price - spot price), 0]Put Option PayoffS(T) = max [ X – ST , 0 ]If the stock price drops to $71, the stock price will be below the strike price. In that case, the option holder will exercise the put option at $73.6. He can buy a share in the market for $71 and sell it immediately for $73.6. This results in a profit of $2.6.So the pay off = max [(strike price - spot price), 0] = max [ (73.6 - 71), 0 ] = 2.6.
The holding period return is the total return earned on an investment during the time it is held. It is calculated as the change in price plus any income received, divided by the original price. In this case, the holding period is 5 months.Holding period return = [(P1 - P0 + D1) / P0] x 100where, P0 = Initial PriceP1 = Final PriceD1 = Income ReceivedSo, the holding period return is as follows:Holding period return = [(73.6 - 76.1 + 2.6) / 76.1] x 100 = -0.654% ≈ -0.65%Thus, the holding-period return would be c. -25.71%.Hence, the correct option is (c) -25.71%.
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kersley's diner's
how to calculate net cash provided by operating
activities using the indirect method
It's important to note that the specific calculations and adjustments may vary depending on the company and its financial statements. It is recommended to refer to the company's financial statements and consult with an accountant or financial professional for precise calculations.
To calculate the net cash provided by operating activities using the indirect method, you generally follow these steps:
1. Start with the net income: Begin with the net income figure from the income statement.
2. Adjust for non-cash expenses and gains/losses: Add back any non-cash expenses (such as depreciation and amortization) and subtract any non-cash gains or add non-cash losses.
3. Adjust for changes in working capital: Analyze the changes in current assets and current liabilities from the comparative balance sheets. Adjustments are made for changes in accounts receivable, accounts payable, inventory, prepaid expenses, accrued expenses, and other working capital items. Increase in current assets generally reduces net cash provided by operating activities, while an increase in current liabilities generally increases net cash provided by operating activities.
4. Adjust for other operating activities: Include any other operating activities not already accounted for, such as interest and dividends received.
5. Summarize and calculate the net cash provided by operating activities: Add up all the adjustments and changes to the net income to arrive at the net cash provided by operating activities.
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A stock is expected to pay an annual dividend of $5 per share in one year. The dividends are expected to grow at a rate of 2% per year forever. The required rate of return for this stock is 12%
1) What is the current stock price?
2) The company now announces that it is undergoing a restructuring operation and it will suspend its next two dividends (i.e. it will pay the investors nothing) and pay out a new, larger dividend of $5.50 per share at the end of three years, which will then continue to grow by 3% per as before. If the market believes this estimate, what is the new current stock price?
The new current stock price is:
New Current Stock Price = Total Present Value = $75.53
To calculate the current stock price, we can use the constant growth dividend discount model:
Current Stock Price = Dividend / (Required Rate of Return - Dividend Growth Rate)
Plugging in the values given, we get:
Current Stock Price = $5 / (0.12 - 0.02) = $50
Therefore, the current stock price is $50.
After the restructuring operation, the new dividend will be $5.50 per share at the end of three years and it will then continue to grow by 3% per year forever. To calculate the new current stock price, we need to find the present value of all future dividends.
First, we need to find the present value of the future dividend payments from year 4 onwards, using the formula:
Present Value = Future Value / (1 + Required Rate of Return)^n
where n is the number of years from the present. The present value of the future dividend payments can be written as:
PV of Future Dividends = $5.50 / (0.12 - 0.03)^1 + ($5.50 * 1.03) / (0.12 - 0.03)^2 + ($5.50 * 1.03^2) / (0.12 - 0.03)^3 + ...
PV of Future Dividends = $71.88
Next, we need to find the present value of the special dividend payment of $5.50 at the end of year 3. This can be written as:
PV of Special Dividend = $5.50 / (1 + 0.12)^3 = $3.65
Finally, we can add the present values of the future dividends and the special dividend to get the total present value of all future cash flows:
Total Present Value = PV of Future Dividends + PV of Special Dividend
Total Present Value = $71.88 + $3.65 = $75.53
Therefore, the new current stock price is:
New Current Stock Price = Total Present Value = $75.53
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At the beginning of 2007 (the year the iPhone was introduced), Apple's beta was 1.2 and the risk-free rate was about 4.6%. Apple's price was $81.49.
Apple's price at the end of 2007 was $197.98.
If you estimate the market risk premium to have been 6.8%, ddid Apple's managers exceed their investors' required return as given by the CAPM?
Question content area bottom
Part 1
The expected return is ____ %
enter your response here. (Round to two decimal places.)
Part 2
The realized return is _____ % enter your response here. (Round to two decimal places.)
Part 3
(Select from the drop-down menu.)
Did Apple's managers exceed their investors' required return as given by the CAPM?
The expected return is 13.62%. The realized return is 142.73%. Apple's managers exceeded their investors' required return as given by the CAPM.
Part 1:
The expected return is 13.62%.
To calculate the expected return using the Capital Asset Pricing Model (CAPM), we use the formula: Expected Return = Risk-Free Rate + Beta * Market Risk Premium. Given that the risk-free rate is 4.6%, the beta is 1.2, and the estimated market risk premium is 6.8%, the calculation is: 4.6% + 1.2 * 6.8% = 13.62%.
Part 2:
The realized return is 142.73%.
The realized return is calculated as the percentage change in price from the beginning to the end of the period: ((Ending Price - Beginning Price) / Beginning Price) * 100. For Apple, the calculation is: ((197.98 - 81.49) / 81.49) * 100 = 142.73%.
Part 3:
Apple's managers exceeded their investors' required return as given by the CAPM.
Comparing the expected return of 13.62% (Part 1) to the realized return of 142.73% (Part 2), we can see that the realized return significantly exceeds the expected return. Therefore, Apple's managers exceeded their investors' required return as given by the CAPM.
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Point Equity Theory, developed by J. Stacey Adams, proposes that managers must treat all subordinates with dignity, respect, and politeness. B employees perceive fairness when they compare their own input: output ratio with the ratio of relevant reference. procedures that are used to determine how to distribute outcomes in an organization must be fair and just for everyone. employees must perceive an equitable degree of fulfillment of both Esteem and Self-actualization needs. "uestion 18 2
According to the Point Equity Theory, developed by J. Stacey Adams, managers should treat all subordinates with dignity, respect, and politeness to ensure a fair working environment. Employees perceive fairness when they compare their own input: output ratio with the ratio of relevant reference.
This ratio reflects the outcomes that other workers who are in a similar position with comparable responsibilities receive in the organization. The procedure used to determine the distribution of outcomes in the organization must be fair and just for everyone.
The Point Equity Theory also implies that employees must perceive an equitable degree of fulfillment of both Esteem and Self-actualization needs.
Esteem needs are related to respect and recognition from others, while Self-actualization needs are related to personal growth, self-realization, and creativity.
Employees who perceive that their needs are not being met fairly may experience demotivation, low productivity, and even leave the organization. In summary, Point Equity Theory is an essential concept for managers to ensure a fair working environment, which can help to motivate employees and enhance productivity.
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From Reuters (31 March, 2022): "Russian President Vladimir Putin was misled by
advisers who were too scared to tell him how poorly the war in Ukraine is going and how
damaging Western sanctions have been, White House and European officials said on
Wednesday." Your task: using our tools explain why this failure to communicate information
is neither surprising nor limited to autocratic Russia; explain how we overcome the
knowledge problem in other domains; and provide recommendations to Putin on what he
could do to improve the information that he receives from his generals.
The failure to communicate accurate information to leaders, as seen in the case of Russian President Vladimir Putin, is not surprising and extends beyond autocratic regimes. Overcoming the knowledge problem in other domains involves implementing mechanisms for reliable and transparent information flow.
The failure to communicate accurate information to leaders is not limited to autocratic regimes like Russia. In various political systems, there can be barriers to the free flow of information and a tendency for advisers to provide distorted or biased reports. This phenomenon arises due to various reasons, including fear of retribution, self-censorship, groupthink, and political motivations. It highlights the challenge of obtaining reliable and unbiased information in the decision-making process.
To overcome the knowledge problem in other domains, societies and organizations adopt measures such as transparency, accountability, and checks and balances. These mechanisms aim to ensure that information is gathered from multiple sources, subject to scrutiny, and evaluated by experts with diverse perspectives. Independent research institutions, investigative journalism, and open data initiatives play crucial roles in providing reliable information to decision-makers.
To improve the information received from his generals, Putin could take several steps. First, he should foster an environment that encourages open and honest dialogue among his advisers. This can be achieved by promoting a culture of transparency, where dissenting opinions are welcomed and critical analysis is valued. Second, diversifying the sources of information can provide a broader perspective on the situation. Seeking input from independent experts, outside agencies, and international partners can help mitigate biases and provide a more accurate assessment. Lastly, holding advisers accountable for providing accurate and unbiased information can incentivize them to provide honest assessments rather than withholding or distorting crucial information.
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as a buyer who has just made an offer, how can you add a term to that offer after the seller has already received it?
As a buyer, you can add a term to your offer after the seller has received it by submitting an amendment or addendum to the original offer.
As a buyer who has just made an offer, you can add a term to that offer after the seller has already received it by submitting an amendment or addendum. This can be done by drafting a written document that clearly states the additional term or condition you wish to include.
The amendment should reference the original offer and clearly outline the new term you want to add. It is important to promptly communicate the amendment to the seller and ensure that they acknowledge and accept the revised terms.
Keep in mind that the seller is under no obligation to accept the amendment, and they may choose to negotiate or reject the proposed changes. Therefore, open and transparent communication is crucial to reaching a mutually satisfactory agreement.
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