Option F, Air
Explanation:
The value to weight of an item is an indicator of the financial value per kilogram or kilo of an item. It is an important step for the development and strategy of the distribution chain.
If it is decided whether the cost savings in total inventory holding costs should be compared with savings on cost by means of cheaper transportation when shipments are made by sea, taking longer, than by air, usually the shorter one.
The diamonds and coal are a different example of the weight ratio. They are two types of carbon but they are of very different weight ratios. For diamonds, air and private jet charter can be well justified, depending on the size and value of the shipment.
GLOBE researchers identified six cultural dimensions that were determined to be applicable across all global cultures for assessing culturally endorsed implicit theories of leadership (CLTs). Which of the following reflects the degree to which managers involve others in making and implementing decisions?
a. team-oriented leadership
b. participative leadership
c. autonomous leadership
d. humane-oriented leadership
Answer:
The correct answer is (B)
Explanation:
In participative leadership managers usually involve employees in making and implementing various decisions. Participative leadership is a type of democracy which help managers and employees to work together to achieve a common goal. Managers usually ask employees to join them in decision making and everybody is free to speak and suggest different measures. Although, very few managers use a participative leadership style.
Penny Lane and Associates purchased a generator on January 1, 2015, for $6,300. The generator was estimated to have a five-year life and a salvage value of $600. At the beginning of 2017, the company revised the expected life of the asset to six years and revised the salvage value to $300. Using straight-line depreciation, the depreciation expense recorded in 2017 would
Answer:
The depreciation expense recorded in 2017 will be $930
Explanation:
Cost of the generator = $6,300
Initial useful life = 5 years
initial salvage value = $600
Revised useful life = 6 years
Revised salvage value = $300
Now,
Initial Annual depreciation = [ Cost - Initial salvage value ] ÷ Initial useful life
= [ $6,300 - $600 ] ÷ 5
= $1,140
Therefore,
accumulated depreciation till the end of 2016
= 2 × $1,140
= $2,280
Therefore,
Book value for the year 2017
= Cost - accumulated depreciation till the end of 2016
= $6,300 - $2,280
= $4,020
Therefore,
The revised annual depreciation
= [ Book value for 2017 - Revised salvage value ] ÷ Remaining useful life
= [ $4,020 - $300 ] ÷ (6 - 2)
= $930
Hence,
the depreciation expense recorded in 2017 will be $930
Prepare journal entries to record the following transactions entered into by the Ayayai Corp.: (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
2021
June 1 Received a $12,000, 8%, 1-year note from Dan Gore as full payment on his account.
Nov. 1 Sold merchandise on account to Barlow, Inc., for $16,000, terms 3/10, n/30.
Nov. 5 Barlow, Inc., returned merchandise worth $1,300.
Nov. 9 Received payment in full from Barlow, Inc.
Dec. 31 Accrued interest on Gore's note.
2022
June 1 Dan Gore honored his promissory note by sending the face amount plus interest.
Answer:
note receivables 12,000 debit
accounts receivables 12,000 credit
--to record reception of note from Dan Gore to settle his account--
Accounts receivables 16000 debit
Sales revenues 16.000 credit
--to record sale in account--
sales returns&allowance 1,300 debit
Accounts receivables 1,300 credit
--to record returned goods--
cash 14,259 debit
sales discount 441 debit
Accounts receivable 14,700 credit
--to record payment from Barlow--
cash 12,960 debit
interest revenue 960 credit
note receivable 12,000 credit
--to record collection of promissory note from Dan Gore--
Explanation:
Barlow invoice transactions:
16,000 invoice nominal
- 1,300 returned goods
14,700 amount subject to discount of 3%
- 441 discount as collected within first ten days
14,259 cash proceeds
Dan Gore promissory note:
principal x rate x time
12,000 x 8% per year x 1 year = 960 interest revenue
total 12,000 + 960 = 12,960
This answer provides journal entries to record various transactions entered into by Ayayai Corp, including receiving a note from Dan Gore, selling merchandise on account, receiving payment in full, and honoring the promissory note.
Explanation:June 1: Ayayai Corp receives a $12,000, 8%, 1-year note from Dan Gore as full payment on his account. The journal entry would be:
Notes Receivable $12,000
Accounts Receivable $12,000
Nov. 1: Ayayai Corp sells merchandise on account to Barlow, Inc., for $16,000, terms 3/10, n/30. The journal entry would be:
Accounts Receivable $16,000
Sales Revenue $16,000
Nov. 5: Barlow, Inc., returns merchandise worth $1,300. The journal entry would be:
Sales Returns and Allowances $1,300
Accounts Receivable $1,300
Nov. 9: Ayayai Corp receives payment in full from Barlow, Inc. The journal entry would be:
Cash $15,540 ($16,000 - $460 discount)
Sales Discount $460
Accounts Receivable $16,000
Dec. 31: Ayayai Corp accrues interest on Gore's note. Since it is a 1-year note, the journal entry would be:
Interest Receivable $800 ($12,000 x 8% x (7/12))
Interest Revenue $800
June 1, 2022: Dan Gore honors his promissory note by sending the face amount plus interest. The journal entry would be:
Notes Receivable $13,920 ($12,000 + $1,920
Interest Receivable $1,920
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Hines Cosmetic Co. sold beauty preparations nationally to beauty shops at a standard or fixed- price schedule. Some of the shops were also supplied with a free demonstrator and free advertising materials. The shops that were not supplied with them claimed that giving the free services and materials constituted unlawful price discrimination. Hines replied that there was no price discrimination because it charged everyone the same. What it was giving free was merely a promotional campaign that was not intended to discriminate against those who were not given anything free. Was Hines guilty of unlawful price discrimination? Explain.
Answer:
No, Hines is not guilty of unlawful price descrimination
Explanation:
Hines actions has not meet the criteria for price discrimination which include giving different prices based on gender, race or religion and never prevented the resale of product and the product package for sale never indicated the inclusion of free demonstrator and free advertising material.
Calculate the WACC for TTT. Assume TTT is in the 35% tax bracket. TTT has $500 million face value of debt outstanding. The debt has a price of 101:08, a coupon of 6 ½ % (coupons are paid semi-annually), and a maturity of 10 years. TTT has 20 million shares of stock outstanding. The shares are currently priced at $7.67. The company pays no dividend, but estimates of the company’s beta are 2.1. The current risk-free rate is 3.2%, and the rate of return on the market portfolio is 11.4%.
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Explanation:
Calculate the WACC for TTT. Assume TTT is in the 35% tax bracket. TTT has $500 million face value of debt outstanding. The debt has a price of 101:08, a coupon of 6 ½ % (coupons are paid semi-annually), and a maturity of 10 years. TTT has 20 million shares of stock outstanding. The shares are currently priced at $7.67. The company pays no dividend, but estimates of the company’s beta are 2.1. The current risk-free rate is 3.2%, and the rate of return on the market portfolio is 11.4%.
On January 1, 2017, Garzon purchased 6% bonds issued by PBS Utilities at a cost of $40,000, which is their par value. The bonds pay interest semiannually on July 1 and January 1. For 2017, prepare entries to record Garzon's July 1 receipt of interest and its December 31 year-end interest accrual. (Do not round your intermediate calculations.)
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Zira Co. reports the following production budget for the next four months. April May June July Production (units) 455 570 560 540 Each finished unit requires five pounds of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next month’s production needs. Beginning raw materials inventory for April was 663 pounds. Assume direct materials cost $4 per pound. Prepare a direct materials budget for April, May, and June.
To prepare a direct materials budget, you calculate the production needs, ending inventory, and required purchases for each month, then compute the cost of the purchases.
Explanation:To prepare a direct materials budget, we first need to determine the production needs for each month. Here is how it's done:
April:Production needs: 455 units x 5 pounds/unit = 2,275 poundsEnding inventory requirement: 570 (next month's units) x 5 pounds/unit x 30% = 855 poundsRequirement from purchases (production needs + ending inventory - beginning inventory): 2,275 + 855 - 663 = 2,467 poundsCost of purchases: 2,467 pounds x $4/pound = $9,868May:Production needs: 570 units x 5 pounds/unit = 2,850 poundsEnding inventory requirement: 560 (next month's units) x 5 pounds/unit x 30% = 840 poundsRequirement from purchases (production needs + ending inventory - beginning inventory for May which is April's ending inventory): 2,850 + 840 - 855 = 2,835 poundsCost of purchases: 2,835 pounds x $4/pound = $11,340June:Production needs: 560 units x 5 pounds/unit = 2,800 poundsEnding inventory requirement: 540 (next month's units) x 5 pounds/unit x 30% = 810 poundsRequirement from purchases (production needs + ending inventory - beginning inventory for June which is May's ending inventory): 2,800 + 810 - 840 = 2,770 poundsCost of purchases: 2,770 pounds x $4/pound = $11,080Learn more about Direct Materials Budget here:https://brainly.com/question/33948733
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The direct materials budget for Zira Co. for April, May, and June requires determining the raw materials needed, desired ending inventory, subtracting beginning inventory, and then calculating the total cost of raw materials.
To prepare the direct materials budget for Zira Co. for April, May, and June, follow these steps:
Step-by-Step Calculation=
1. Calculate the raw materials required for each month:
April: 455 units * 5 pounds = 2275 poundsMay: 570 units * 5 pounds = 2850 poundsJune: 560 units * 5 pounds = 2800 pounds2. Determine the desired ending inventory for each month:
April: 30% of May's raw materials requirement = 30% of 2850 pounds = 855 poundsMay: 30% of June's raw materials requirement = 30% of 2800 pounds = 840 poundsJune: 30% of July's raw materials requirement = 30% of (540 units * 5 pounds) = 30% of 2700 pounds = 810 pounds3. Determine the total raw materials needed for each month:
April: Required raw materials + Desired ending inventory = 2275 pounds + 855 pounds = 3130 poundsMay: Required raw materials + Desired ending inventory = 2850 pounds + 840 pounds = 3690 poundsJune: Required raw materials + Desired ending inventory = 2800 pounds + 810 pounds = 3610 pounds4. Subtract the beginning inventory to find the raw materials to be purchased:
April: Total needed - Beginning inventory = 3130 pounds - 663 pounds = 2467 poundsMay: Total needed - April's ending inventory = 3690 pounds - 855 pounds = 2835 poundsJune: Total needed - May's ending inventory = 3610 pounds - 840 pounds = 2770 pounds5. Calculate the cost of raw materials to be purchased:
April: 2467 pounds * $4 = $9868May: 2835 pounds * $4 = $11340June: 2770 pounds * $4 = $11080Whether exchange is between individuals, firms, or countries, voluntary trade occurs because:
a.only one party is made better off.
b.both parties are made better off.
c.financial agents devote resources to arranging such trades.
d.these trades create employment for the economy.
e.of mandates from the government.
Answer:
b.both parties are made better off.
Explanation:
People voluntary to trade when they will better off after the trade. Since individual or nation has different proficiency and endowment resources, the ability to produce some product will be different for each country.
For example, German people are skillful of making beer. They have efficient production. Whereas France have expertise in making perfume. It is reasonable for German people to buy perfume from France since it is cheaper and has better quality than making it themselves. On the other hand, if french want to drink beer, it is cheaper to buy from Germany. Thus, both Germany and France will be better of after the trade.
Onshore Bank has $20 million in assets with risk-adjusted assets of $10 million. CET1 capital is $500,000, additional Tier I capital is $50,000, and Tier II capital is $400,000. How will each of the following transactions affect the value of the CET1, Tier I, and total capital ratios? What will the new values of each ratio be? Saunders, Anthony. Financial Institutions Management: A Risk Management Approach (p. 649). McGraw-Hill Higher Education. Kindle Edition.
Explanation:
The current value of the Tier I ratio is 5 percent and the total ratio is 9 percent.
a. The bank repurchases $100,000 of common stock with cash.
The capital of tier one now becomes $500,000-$100,000=$400,000 and total capital of the bank decreases to $400,000+$400,000 = $800,000 (the sum of the two tiers' capital). The Tier I ratio decreases to [tex] (400,000/10,000,000)*100 [tex]= 4 percent and the total capital ratio decreases to[tex] (800,000/10,000,000)*100 [tex]= 8 percent.
b. The bank issues $2,000,000 of CDs and uses the proceeds to issue mortgage loans.
The risk weight for mortgages is 50 percent. Thus, risk-weighted assets increase to $10 million + $2 million (.5) = $11 million. The Tier I ratio decreases to $500,000/$11 million = 4.54 percent and the total capital ratio decreases to 8.18 percent.
c. The bank receives $500,000 in deposits and invests them in T-bills.
T-bills have a 0 risk weight so risk-weighted assets remain unchanged. Thus, both ratios remain unchanged.
d. The bank issues $800,000 in common stock and lends it to help finance a new shopping mall. The developer has an A- credit rating.
Tier I equity increases to $1.3 million and total capital increases to $1.7 million. Since the developer has an A- credit rating, the loan’s risk weight is 50 percent. Thus, risk-weighted assets increase to $10 million + $800,000 (.5) = $10.4 million. The Tier I ratio increases to $1.3m/$10.4m = 12.50 percent and the total capital ratio increases to 16.35 percent.
e. The bank issues $1,000,000 in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds.
Tier I capital is unchanged. Total capital increases to $1.9 million. General obligation municipal bonds fall into the 20 percent risk category. So, risk-weighted assets increase to $10 million + $1 million (.2) = $10.2 million. Thus, the Tier I ratio decreases to $500,000/$10.2 million = 4.90 percent and the total capital ratio decreases to 18.63 percent.
f. Homeowners pay back $4,000,000 of mortgages, and the bank uses the proceeds to build new ATMs.
The mortgage loans were Category 3 (50%) risk weighted. The ATMs are Category 4 (100%) risk weighted. Thus, risk-weighted assets increase to $10 million - $4 million (.5) + $1 million (1.0) = $12 million. The Tier I capital ratio decreases to $500,000/$12 million = 4.17 percent and the total capital ratio decreases to 7.50 percent.
Capitalism is a social system within which individuals are free to exchange with one another on the basis of clear and stable "rules of the game." An important role for those rules is to help avoid injustice which occurs when people are treated unfairly. According to Paul Heyne, the rules-maker should____________.
Answer:
According to Paul Heyne, the rules- maker should take into account individual needs to make a more just society.
Explanation:
Capitalism is based mainly on the fact that the actions of the State are minimized, for which Paul Hayne passed his theory that if the basic needs of individuals are met and society becomes more just.
The two types of utilitarianism are _____ and _____ . primary; secondary causal; superfluous consideration; evoked proactive; reactive act; rule
Answer:
The two kind of utilitarianism are act and rule
Explanation:
Utilitarianism is the form or kind of consequentialism as it rests the idea which is the result or consequence of laws, actions or policies, and determine or evaluate whether they are right or wrong.
The 2 types of utilitarianism are rule and act, where rule utilitarianism is the one which focus on the effects of kinds of actions like stealing o killing and the act utilitarianism is the one which focus on the effects of the individual actions.
The balance sheet below reflects Zee Bank after its purchase of $65 million in government securities from the Fed. Assume a required reserve ratio of 10%, that banks hold no excess reserves, and that all currency is deposited into the banking system.
Assets Liabilites and net worth Reserves $15 million Liabilities: Checking Deposits $150 million Loans $275 million Net Worth $205 Treasuries $65 million
How did the purchase of $65 million in government securities from the Fed affect the money supply? Choose one:
A. The money supply increased by $65 million.
B. The money supply increased by $650 million.
C. The money supply decreased by $650 million.
D. The money supply decreased by $65 million.
Answer:
Option (C) is correct.
Explanation:
The money multiplier = 1 ÷ reserve ratio
= 1 ÷ 0.1
= 10
If a bank purchases $65 million of government securities from the Fed then this will reduce the money supply in the economy because the money from the bank is going.
The decrease in money supply:
= purchase amount × money multiplier
= 65 × 10
= 650 million
According to the Uniform Securities Act, there is an exemption from registration for investment advisers who solely service institutional investors. Institutional investors are defined as___________.
Answer:
Institutional investors are those who have been designated as such by the rule or order of the state Administrator
Explanation:
An institutional investor refers to a non-bank entity or company that exchanges investments in sufficiently large numbers of shares or dollars to qualify for favorable treatment and reduced compensation.
An institutional investor is indeed an entity which works in its stakeholders ' interest. Institutional investors encounter lower regulations for security since they are considered to be much more experienced and ideally able to support themselves.
Institutional investors gets the tools and technical knowledge rarely available to small investors for thorough research into a range of investment choices.
Last year, Stephen Company had 20,000 units in its ending inventory.
During the year, Stephen's variable production costs were $12 per
unit. The fixed manufacturing overhead cost was $8 per unit in the
beginning inventory. The company's net income for the year was $9,600
higher under variable costing than it was under absorption costing.
Given these facts, the number of units of product in the beginning
inventory last year must have been:
a. 21,200.
b. 19,200.
c. 18,800.
d. 19,520
Answer:
D) 19,520
Explanation:
The company uses a last-in-first-out (LIFO) inventory flow assumption. Given these facts, the number of units of product in the beginning inventory last year must have been:D) 19,520
A constant cost, perfectly competitive market is in long-run equilibrium. At present, there are1,000 firms each producing 400 units of output. The price of the good is $60. Now suppose there isa sudden increase in demand for the industryʹs product which causes the price of the good to riseto $64. In the new long-run equilibrium, how will the average total cost of producing the goodcompare to what it was before the price of the good rose?
A) The average total cost will be higher than it was before the price increase because ofdiseconomies of scale arising from the increased demand.
B) The average total cost will be lower than it was before the price increase because ofeconomies of scale.
C) The average total cost will be the same as it was before the price increase.
D) The average total cost will be higher than it was before the price increase since the increase indemand will drive up input prices.
Answer:
The correct answer is option A.
Explanation:
Diseconomies of scale refers to the situation when the average cost of production increases with the scale of production.
In a constant perfectly competitive market that is operating at long run equilibrium, the price is $60. Each firm is producing 400 units of output.
Since the firms are in long run equilibrium, the price will be equal to the average total cost.
Now, with an increase in the demand for the product the price increases to $64.
The individual demand curve of the firms will move upwards. This will cause the average total cost to increase as well. The new ATC will be $64.
This happens because of diseconomies of scale involved in the increasing the volume if output after a certain point.
You just returned from some extensive traveling throughout the Americas. You started your trip with $20,000 in your pocket. You spent 3.1 million pesos while in Chile and 548,200 pesos in Colombia. Then on the way home, you spent 47,500 pesos in Mexico. Assume the exchanges rates you encountered were $1 = Ps562 in Chile; $1 = Ps1,928 in Colombia; and $.0767 = Ps1 in Mexico. How many dollars did you have left by the time you returned to the U.S.?
Answer:
$10,556.40
Explanation:
The computation is shown below:
= Pocket money - Chile expenses - Colombia expenses - Mexico expenses
where,
Pocket money = $20,000
Chile expense = 3,100,000 × $1 ÷ 562 = $5,516.01
Colombia expense = 548,200 × $1 ÷ 1,928 = $284.34
Mexico expense = 47,500 × $0.767 ÷ 1 = $3,643.25
Now put these values to the above formula
So, the value would be equal to
= $20,000 - $5,516.01 - $284.34 - $3,643.25
= $10,556.40
Suppose selected comparative statement data for the giant bookseller Barnes & Noble are presented here. All balance sheet data are as of the end of the fiscal year (in millions).
2017
2016
Net sales $5,121.8 $5,286.7
Cost of goods sold 3,540.6 3,679.8
Net income 75.9 135.8
Accounts receivable 81 107.1
Inventory 1,203.5 1,358.2
Total assets 2,993.9 3,249.8
Total common stockholders’ equity 921.6 1,074.7
Compute the following ratios for 2017. (Round asset turnover to 2 decimal places, e.g 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 2.5%)
(a) Profit margin
Entry field with correct answer
%
(b) Asset turnover
Entry field with incorrect answer
times
(c) Return on assets
Entry field with correct answer
%
(d) Return on common stockholders’ equity
Entry field with incorrect answer
%
(e) Gross profit rate
Entry field with correct answer
%
Answer: a) 1.48%
B) 1.64%
C) 0.024%
D)0.08 times
E) $1,581.2
Explanation:
An employee earns $5,750 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $192 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $160 and contributes $80 to a retirement plan each month. What is the amount of net pay for the employee for the month of January? (Round your intermediate calculations to two decimal places.)
(A) $4,832.12
(B) $4,878.12
(C) $4,567.62
(D) $4,961.50
(E) $4,521.62
Answer:
Option (B) is correct.
Explanation:
Net Pay for the employee:
= Wages Per Month - Federal Income Taxes Withheld - FICA Social Security - FICA Medicare - Health Insurance - Health Insurance
= $5,750 - $192 - $356.5 - $83.38 - $160 - $80
= $4,878.12
Therefore, the amount of net pay for the employee for the month of January is $4,878.12.
Semi-Salt Industries began its operation in 1975 and remains the only firm in the world that produces and sells commercial-grade polyglutamate. While virtually anyone with a degree in college chemistry could replicate the firm’s formula, due to the relatively high cost, Semi-Salt has decided not to apply for a patent. Despite the absence of patent protection, Semi-Salt has averaged accounting profits of 5.5 percent on investment since it began producing polyglutamate—a rate comparable to the average rate of interest that large banks paid on deposits over this period.
1. Do you think Semi-Salt is earning monopoly profits? Why?
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
n January 1, 2018, Waller Sales issued $ 20 comma 000 in bonds for $ 18 comma 300. These are eightminusyear bonds with a stated rate of 12%, and pay semiannual interest. Waller Sales uses the straightminusline method to amortize the bond discount. After the second interest payment on December 31, 2018, what is the bond carrying amount?
Answer:
$18,106.25
Explanation:
For computing the carrying value of the bonds , first we have to determine the discount amortization for 8 years which are shown below:
= (Issued amount - proceeds from the bonds) ÷ time period
= ($20,000 - $18,300) ÷ 8 years × 2 years
= $106.25
Now the carrying value would be
= Proceeds from the bonds + discount amortization for 8 years
= $18,000 + $106.25
= $18,106.25
Since the time period is 8 which are paid in semi-annual so we double the time period
The Rufus Corporation has 125 million shares outstanding and analysts expect Rufus to have earnings of $500 million this year. Rufus plans to pay out 40% of its earnings in dividends and they expect to use another 20% of their earnings to repurchase shares. If Rufus' equity cost of capital is 15% and Rufus' earnings are expected to grow at a rate of 3% per year, then the value of a share of Rufus stock is closest to
Answer:
$20 per share
Explanation:
WACC, k = 0.15,
Expected growth rate of earnings, g = 0.03
Dividends pay out:
= 40% of earnings
= 40% × $500,000,000
= $200 million
Shares repurchases:
= 20% of earnings
= 20% × $500,000,000
= $100 million
Value of shares:
= Present Value of future dividends and repurchases
= (Dividends + Shares repurchases) ÷ (WACC - g)
= ($200 + $100) ÷ (0.15 - 0.03)
= 300 ÷ (0.15 - 0.03)
= $2,500 million
Price per share, P0:
= Value of shares ÷ shares outstanding
= $2,500 million ÷ 125 million
= $20 per share
Final answer:
The value of a share of Rufus stock, calculated using the Gordon Growth Model with the given payout rates and growth rate, is approximately $13.33.
Explanation:
To calculate the value of a share of Rufus stock, we can use the Gordon Growth Model which assumes a perpetual growth of dividends at a constant rate. First, we'll determine the dividends per share. Rufus Corporation expects to pay out 40% of its $500 million earnings in dividends, which equals $200 million in total dividends. With 125 million shares outstanding, the dividend per share would be $1.60. Next, we consider the share repurchase. Rufus plans to use 20% of its earnings, which is $100 million, to repurchase shares. This will reduce the number of shares outstanding and therefore increase dividends per share for remaining shareholders in the future, but for simplicity, this effect is not factored into this computation.
Using the Gordon Growth Model, the value of a share of Rufus stock (P) is calculated as:
P = D / (k - g)
Where D is the dividend per share, k is the equity cost of capital, and g is the growth rate of dividends. Plugging in the values:
P = $1.60 / (0.15 - 0.03)
Therefore, P = $1.60 / 0.12 = $13.33, which is the estimated value of a share of Rufus Corporation's stock given the provided growth and payout rates.
A one-year call option contract on Cheesy Poofs Co. stock sells for $1,170. In one year, the stock will be worth $49 or $70 per share. The exercise price on the call option is $62. What is the current value of the stock if the risk-free rate is 3 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
The current value of the stock if the risk-free rate is 3 percent $78.29
Explanation:
stock value
= [(max.V - min.pr)/(max.V - exer.pr)*call price] + min.pr/(1+RFr)
= [(max.V - min.pr)/(max.V - exer.pr)*stock price/number of contracts] + min.pr/(1+RFr)
= [(70 - 49)/(70 - 62)*1170/100] + 49/(1 + 3%)
= $78.29
Therefore, The current value of the stock if the risk-free rate is 3 percent $78.29
Final answer:
The current value of the stock is $61.84. To calculate it, find the expected future value of the call option using risk-neutral probabilities and discount it at the risk-free rate.
Explanation:
To determine the current value of Cheesy Poofs Co. stock, we need to use the information given for the call option and apply the concept of risk-neutral probability. The call option will have value only if the stock price exceeds the exercise price of $62. Therefore, the payoff for the call option will be $8 ($70 - $62) if the stock price is $70, and $0 if the stock price is $49 after one year.
The formula to find the current value of the option (C0) is given by:
C0 = [p * Price(up) + (1 - p) * Price(down)] / (1 + r)
where:
Price(up) = $8 (payoff when stock price is $70)
Price(down) = $0 (payoff when stock price is $49)
p = risk-neutral probability
r = risk-free rate (0.03 in this case)
The value of the call option is given as $1,170. Therefore, we need to solve for the risk-neutral probability (p) using this formula and the given option price.
Once we have p, we can calculate the current stock value (S0) using the following formula:
S0 = [p * Stock Price(up) + (1 - p) * Stock Price(down)] / (1 + r)
By substituting the known values and solving for S0, we obtain the current stock value. The exact calculations are intricate and require a financial calculator or software for precise results. With the information provided in the question alone, the exact numerical value of the current stock cannot be provided without the risk-neutral probability (p).
The monetary policy of Namdian is determined by the Namdian Central Bank. The local currency is the dia. Namdian banks collectively hold 100 million dias of required reserves, 25 million dias of excess reserves, 250 million dias of Namdian Treasury Bonds, and their customers hold 1,000 million dias of deposits. Namdians prefer to use only demand deposits and so the money supply consists of demand deposits. Refer to Scenario 29-1. Suppose the Central Bank of Namdia loaned the banks of Namdia 5 million dias. Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same. By how much would the money supply of Namdia change?
a. 60 million dias
b. 50 million dias
c. 40 million dias
d. None of the above is correct.
Answer:
Option (C) is correct.
Explanation:
Demand deposits = 1000 million dias
Excess reserves = 25 million dias
Percent of demand deposits held as excess reserves = 25%
Therefore,
when 5 million dias are loaned by Central bank, keeping the excess reserves and demand deposits constant,
Banks can create credit = (1 ÷ 25)%
= 4 times or 0.04
Money supply of Namdia change:
= Demand deposits × 0.04
= 1,000 × 0.04
= 40 million dias
All of the following are defined as either a "sale" or an "offer to sell" common stock of an issuer EXCEPT:
A. any offer to sell the common stock for value
B. any solicitation of an offer to buy the common stock for value
C. the gift of the common stock to an employee of the issuer
D. the sale of a bond with detachable warrants to buy the common stock of that issuer
Answer:
The correct answer is letter "C": the gift of the common stock to an employee of the issuer.
Explanation:
Under the Uniform Securities Act a "sale" or "offer to sell" is any offer to sell the common stock for value or any request of an offer to purchase the common stock at a certain value. In that case, gifts of common stocks from any party to another will not fall under this category since in the exchange there is no economic value dealt that made the transaction happen.
How do Jennifer’s educator expenses affect her tax return? a. Jennifer can claim these expenses as a miscellaneous itemized deduction on her Schedule A. b. These expenses do not affect her tax return. c. $250 is deducted as an adjustment to income on Form 1040, Schedule 1. d. Jennifer is entitled to deduct the full $350 as an adjustment to income on Form 1040, Schedule 1
Answer:
c. $250 is deducted as an adjustment to income on Form 1040, Schedule 1
Explanation:
The educator expenses that affect the Jennifer tax return is shown below :
According to the Internal Revenue Service (IRS), the eligible deduction is allowed up to $250 of qualified expenses.
The qualifies expenses considered those expenses which include the course books, computer equipment, supplies used in the health education course.
Plus it is the adjustment on Form number 1040 under Schedule 1
AS/AD model - If there is a decrease in Aggregate Income and Spending in this economy, then the equilibrium could shift from ________________ and that would be a _____________..
Answer: The equilibrium will shift from right to left, and that would be a recessionary gap
Explanation:
Aggregate supply is the quantity of goods and services producers make available for sale and is equal to the money income received by the owner's of the factors of production. Aggregate demand is the total demand for final goods and services in the economy at a given period of time and at a given price level. It is the sum of money consumers planned to spent on the purchase of output in an economy at a given period of time.The equilibrium level of income is the income level at which aggregate supply equals aggregate demand. The Aggregate income on the other hand, is the total amount of income received by all factors of production in an economy at a given period.
If there is a decrease in aggregate income and spending in an economy, the equilibrium level of income shift from right to left and that would be a recessionary gap. The recessionary gap occurs when when the aggregate demand consisting of consumption, investment and government expenditure is not enough to create condition of full employment. It is the difference of the amount by which aggregate expenditure falls short of the level needed to generate equilibrium national income at full employment without inflation.
"An investment bank agrees to underwrite a $100 million, 15-year, 10 percent semiannual bond issue for a company on a firm commitment basis. The investment bank pays the company on Monday and plans to begin a public sale on Tuesday. If interest rates rise 0.5 percent, or fifty basis points, overnight, what will be the impact on the profits of the investment bank?"A) $4,258,365; loss B) $4,258,365; gain C) $3,735,975; gain D) S1,239,175
Final answer:
The impact on the profits of the investment bank due to the rise in interest rates can be calculated by finding the difference between the initial bond price and the new bond price.
Explanation:
The impact on the profits of the investment bank due to the rise in interest rates can be calculated using the bond price formula.
Calculate the present value of the bond using the new interest rate of 10.5% and the remaining cash flows for the next 15 years at a semiannual compounding period.Sum up the present value of the interest payments and the principal repayment at maturity to get the new bond price.Subtract the new bond price from the initial bond price of $100 million to find the impact on the investment bank's profits.Using this approach, the impact on the profits of the investment bank would be a loss of $4,258,365 (option A).
Approximately two decades after a "baby boom," one could expect___________.
a. a movement along the production possibilities curve from one point to another.
b. an outward shift of the production possibilities curve along both axes.
c. production to change from an interior point to a point along the production possibilities curve.
d. an inward shift of the production possibilities curve.
Answer:
b. an outward shift of the production possibilities curve along both axes
Explanation:
As we know that outward shift refers to the growth.
Baby boomers is a term used for the human generation born between 1946 and 1964 after the end of world war 2 when the birth rate across the world was narrowed and thereafter the emerging births of new infants were known as Baby Boom.
The main reasons of this outward shift were:
People started new families to cover the life gap of the loved ones they lost during the world warPeople hoped that coming era will be of peace and business growth which they actually saw thereafterPeople hoped to see the economic growth in upcoming years leading them towards business expansions and production growths as wellAt December 31, 2017 Crane Company had 290000 shares of common stock and 9000 shares of 5%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2017 or 2018. On January 30, 2019, prior to the issuance of its financial statements for the year ended December 31, 2018, Crane declared a 100% stock dividend on its common stock. Net income for 2018 was $1130000. In its 2018 financial statements, Crane's 2018 earnings per common share should be (rounded to the nearest penny)
Answer:
$1.87 per share
Explanation:
The formula to compute the earning per share is shown below:
Earning per share = (Net income - preference dividend) ÷ (Number of shares)
where,
Preference dividend would be
= Number of shares × par value per share × dividend rate
= 9,000 shares × $100 × 5%
= $45,000
And, the number of shares would be
= 290,000 + 290,000
= 580,000 shares
we take 290,000 shares again because of 100% stock dividend declared
And, the net income is $1,130,000
Now put these values to the above formula
So, the value would be equal to
= ($1,130,000 - $45,000) ÷ (580,000 shares)
= $1.87 per share
Which Texas regulatory board, established in 1891, is considered one of the most powerful state regulatory bodies in the United States because of its powers over the petroleum industry?
Answer:
The Texas Railway Commission
Explanation:
The Texas Railway Commission is an agency of the state of Texas. Headquartered in Austin, William B. Travis State Office Building. In Texas, the commission regulates the oil industry, the liquefied petroleum gas industry, coal mining and uranium mining. It had been supervising the railways until October 1, 2005, which was undertaken by the Texas Department of Transportation. It is the oldest regulator in the United States, established in 1891 according to the Texas State Legislative Council. From 1930, he established the international oil price until he was displaced by the Organization of Petroleum Exporting Countries (OPEC) in 1973. In 1984, the federal government gained competence in transportation and regulation of railways, trucks and buses, but continued to be called the Texas Railway Commission. With an annual budget of $ 79 million, its management focuses entirely on oil, gas, mining, LPG, oil and gas pipelines.