Answer:
The correct option is D
Explanation:
Variable cost is the corporate cost or an expense which varies in proportion or relation to the production output. Increase or decrease in the variable cost grounded on the production volume of the company or firm, which in short means that increase or rise in variable cost and the production increases and fall in variable cost, production decreases.
Therefore, the cost which changes or varies in the proportion to change in the volume of the activity is known or referred as variable cost.
At L=64, K = 82, the marginal product of labor is 10 and the marginal product of capital is 20. What is the marginal rate of technical substitution (labor measured on the horizontal axis)?
The marginal rate of technical substitution is _________.(Enter a numeric response using real number rounded up to two decimal places)
Answer:
-0.5
Explanation:
Marginal rate of technical substitution (MRTS) refers to the rate at which the inputs are substituted for one another in a production of particular good.
Given that,
The marginal product of labor = 10
The marginal product of capital = 20
Hence,
[tex]MRTS=(-)\frac{MP_{L} }{MP_{K} }[/tex]
[tex]MRTS=(-)\frac{10}{20}[/tex]
= - 0.5
Therefore, the marginal rate of technical substitution is - 0.5.
The Marginal Rate of Technical Substitution (MRTS) is -0.5, indicating that each additional unit of capital can substitute 0.5 units of labor while maintaining the same production level.
Explanation:The Marginal Rate of Technical Substitution (MRTS) measures the rate at which a firm can substitute capital for labor and still remain at the same level of production. It is calculated by taking the negative ratio of the marginal product of labor (MPL) to the marginal product of capital (MPK), as labor is measured on the horizontal axis. In the given scenario, the MPL is 10 and the MPK is 20.
To calculate the MRTS, we use the formula: MRTS = -MPL/MPK. By substituting the given values, we get MRTS = -10/20 = -0.5.
So, in this case, the Marginal Rate of Technical Substitution is -0.5, meaning that each additional unit of capital used would decrease the amount of labor needed by 0.5 units, maintaining the same level of production.
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Lone Star has computed the following unit costs for the year just ended:
Direct material used $12
Direct labor $18
Variable manufacturing overhead $25
Fixed manufacturing overhead $29
Variable selling and administrative cost $10
Fixed selling and administrative cost $17
Under absorption costing, each unit of the company's inventory would be carried at:
$55.
$65.
some other amount.
$84.
$35.
Answer:
$84
Explanation:
The computation of each unit of the company's inventory under absorption costing is shown below:
= Direct material used + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead
= $12 + $18 + $25 + $29
= $84
We simply added the first four-unit cost through which total unit cost would come
All other information which is given is not relevant. Hence, ignored it
Your project sponsor, after reading through the risk response plan, has sent you an email asking you to justify the costs associated with the risk responses. You have decided to have each risk owner justify the cost for the responses to their risks. In delegating this work to them, provide instructions on how they would complete this analysis to show the benefit of the risk responses.
Answer:
Please find the detailed answer as follows:
Explanation:
A cost benefit analysis will be the most appropriate in this case.
Instructions to develop cost association with the risk responses:
List the risks associated with the system Note down the direct costs associated with the risk Note down the indirect costs associated with the risk Highlight the benefits associated with the solution for the risk
You bought a stock one year ago for $ 50.00 per share and sold it today for $ 55.00 per share. It paid a $ 1.00 per share dividend today.
a.What was your realized return?
b. How much of the return came from dividend yield and how much came from capital gain?
Answer:
a. 12%
b. 2% and 10%
Explanation:
a. The computation of the realized return is shown below:
= {(Ending share price - initial price) + Dividend} ÷ (Initial price) × 100
= {$1 + ($55 - $50)} ÷ $50
= 12%
b. The computation of the dividend yield and the capital gain is shown below:
Dividend yield
= (Dividend) ÷ (initial price) × 100
= $1 ÷ $50 × 100
= 2%
For capital gain yield:
= (Ending share price - initial price) ÷ (Initial price) × 100
= ($55 - $50) ÷ ($50) × 100
= $5 ÷ $50 × 100
= 10%
Grace owns a house. She can rent her house for two years to one tenant for a profit of $24,000 a year, or she can rent it to two tenants each year for a profit of $10,000 per tenant per year. Calculate the economic rent over the course of two years of renting to one tenant.
Answer:
The economic rent will be $8,000
Explanation:
The formula to compute the economic rent renting to 1 tenant is as:
Economic rent = Marginal Product - Opportunity Cost
where
Marginal cost would be for two years $24,000 × 2
= $48,000
Opportunity cost would be renting to 2 tenant per year
= $10,000 × 2 year × 2 person
= $40,000
Putting the values above:
= $48,000 - $40,000
= $8,000
Assume deflation is occurring in a nation; the implication(s):
Answer:
1) Demand for goods declines
2) Salaries declines
3) Bank loans reduces
4) Buyers' losses increase
5) Wages declines, debts increases
6) Interest rates go to zero
7) Business profits decrease
8) Unemployment increases
Explanation:
There are always reasons to beware of deflation. These are:
1) While consumers are not in a hurry to buy goods in the prospect of falling prices, there is a delay in demand, and demand for goods declines. In addition, prices are falling in response to a declining student.
2) Salary projections are also declining, and consumers are more likely to save than spend money. For example, 70% of US economic growth is based on consumption, which could lead to overall GDP decline in the country.
3) The volume of bank loans is also reduced, as repayment of interest rates that are larger than the loans themselves is not beneficial to the borrower.
4) Buyers are subject to a loss of value over time as the value of the goods they purchase.
5) The higher the debt of the borrower, the worse it is: during deflation, wages are reduced, and debt remains the same.
6) During inflation there is no upper limit of interest rates, and in deflation they go to zero. Banks do not offer 0% credit, and when rates are above zero, banks make money, but borrowers have to make losses here.
7) Companies' profits also decrease during deflation, which results in lower securities prices. This worries private investors who want to keep their profits out of dividends.
8) Unemployment increases while companies' struggles to make a profit, and their wages decrease. These processes have a negative impact on the economy as a whole.
Which of the following statements about the consumers’ responses to rising gasoline prices is correct?
a.About 10 percent of the long-run reduction in quantity demanded arises because people drive less and about 90 percent arises because they switch to more fuel-efficient cars.
b.About 90 percent of the long-run reduction in quantity demanded arises because people drive less and about 10 percent arises because they switch to more fuel-efficient cars
.c.About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.
d.Because gasoline is a necessity, consumers do not decrease their quantity demanded in either the short run or the long run
Answer:
c.About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.
Explanation:
In a long run, The demand is more elastic than in a short run, this is because the consumers have both more time and number of substitutes to switch to. So almost 50% of long-run decrease in quantity demanded is due to less driving by people, while rest 50% is due to people switching to more fuel-efficient cars.
When the price level declines the interest rate falls, and consumers borrow more funds, which causes a movement down along the aggregate demand curve. interest rates fall, and consumers borrow more funds, which causes the aggregate demand curve to shift to the left. the interest rate rises, and consumers borrow fewer funds, which causes a movement up the aggregate demand curve. the interest rate is not affected, so there is no movement along the aggregate demand curve.
Answer:
Interest rates fall, and consumers borrow more funds, which causes the aggregate demand curve to shift to the left.
Explanation:
The quantity of money demanded is inversely related to the interest rate. One of the most useful features of the liquidity preference framework is that it allows us to see how changes in the demand and supply of money affect interest rates.
Equilibrium interest rates will increase if there is a…
Increase in money demand (+)
Decrease in money supply (+)
Equilibrium interest rates will decrease if there is a…
Decrease in money demand (-)
Increase in money supply (-)
A lower price level has the opposite affect inducing a decrease in the interest rate which triggers an increase in borrowing used for consumption expenditures and investment expenditures. The negative slope of the aggregate demand curve captures the inverse relation between the price level and aggregate expenditures on real production.When the price level changes, the interest-rate effect is activated, which is what then results in a change in aggregate expenditures and the movement long the aggregate demand curve.A higher interest rate can add to the overall cost of the expenditure. A lower interest rate can reduce the overall cost of the expenditure.
This means that changes in the interest rate can have a big impact on consumption and investment spending. The interest rate tends to increase and decrease as the price level increases and decreases. This means that a higher price level induces a higher interest rate which raises the cost of borrowing and discourages investment and consumption spending. A lower price level has the opposite result.
The Fed has decided to expand the money supply, leading to lower interest rates. As a partner in a tech start-up, you react to these lower interest rates by deciding to expand your operations and begin marketing your new artificial intelligence prototype. What impacts would this decision have on the macroeconomy? Choose one or more: A. reducing unemployment B. raising GDP C. decreasing aggregate demand D. increasing the investment part of GDP E. increase net imports
Answer:
A, B and D
Explanation:
Expanding the money supply is an exercise of expansionary monetary policy.
This decision will first allow our tech startup to acquire cheaper loans and expand our operations, this expansion in operations will result in new employment opportunities and hence as a result, unemployment will be reduced assuming this is a general trend in the economy.
This decision also directly reflects an increased investment and hence the GDP on the whole and the investment part of GDP would both increase,
GDP = C + I + G + (X - M), where I = investment.
This change in macro economy will increase aggregate demand due to expansionary effects. Increase in imports is not conclusive as it may or may not happen depending upon the demand state.
Hope this helps.
Joni Kingbird Inc. has the following amounts reported in its general ledger at the end of the current year.
Organization costs $24,200
Trademarks 16,500
Discount on bonds payable 37,200
Deposits with advertising agency for ads to promote goodwill of company 12,200
Excess of cost over fair value of net identifiable assets of acquired subsidiary 77,200
Cost of equipment acquired for research and development projects; the equipment has an alternative future use 87,200
Costs of developing a secret formula for a product that is expected to be marketed for at least 20 years 83,400
On the basis of this information, compute the total amount to be reported by Kingbird for intangible assets on its balance sheet at year-end.
Answer:
$93,700
Explanation:
Excess of cost over fair value of net identifiable assets of acquired subsidiary Shall be considered as good will and it will come under the head intangible assets.
Other are considered to be a expense.
Total amount reported for intangible assets:
= Trademarks + Excess of cost over fair value of net identifiable assets of acquired subsidiary
= $16,500 + $77,200
= $93,700
Given the acquisition cost of product Z is $64, the net realizable value for product Z is $58, the normal profit for product Z is $5, and the market value (replacement cost) for product Z is $60, what is the proper per unit inventory price for product Z?
a. $64.
b. $60.
c. $53.
d. $58.
Answer:
option (d) $58
Explanation:
Data provided in the question:
Acquisition cost of product Z = $64
Net realizable value for product Z = $58
Normal profit for product Z = $5
Market value (replacement cost) for product Z = $60
Now,
Floor Net realizable value = Net realizable value - Normal profit
= $58 - $5
= $53
Proper per unit inventory price for product Z
= lower of [ cost , net reliable value ]
= lower of [ $64 , $58 ]
= $58
Hence,
The answer is option (d) $58
A higher Discount Rate tends to ___________ the price of loans because the overall supply of bank reserves tends to be smaller..
Answer:
decrease
Explanation:
Discount rates on loans have an inverse relationship with loan prices; if the rate increases, the price will decrease and vice versa. In this case, a higher discount rate will decrease the price of loans as excess reserves in commercial banks and other lending institutions get smaller. This reduces the overall money supply in the economy.
You own a portfolio that is invested 20 percent in stock A, 30 percent in stock B, and the remainder in stock C. The expected returns on these stocks are 3.7 percent, 14.5 percent, and 18.2 percent, respectively. What is the expected return on the portfolio?
Answer:
The expected return on the portfolio is 14.19%.
Explanation:
This problem require us to calculate the expected return on entire portfolio. The expected return on every stock that will be the part of portfolio is given in the question and their weightage in portfolio is also provided in the problem.
We can easily calculate the expected return using following weightage average formula.
ER portfolio' = WA * ERA + WB * ERB + WC* ERC
' WA = Weightage of stock in portfolio
ERA = Expected return on stock A
= 20% * 3.7 + 30% * 14.5 + 50* 18.2
= 14.19%
Patricia McDonald has determined that the value of her liquid assets is $4,500, the value of her real estate is $148,000, the value of her personal possessions is $62,000, and the value of her investment assets is $73,000. She has also determined the value of her current liabilities is $7,500 and the value of her long term liabilities is $98,000. What is Patricia's net worth?
Answer:
$182,000
Explanation:
Total assets:
= Value of her liquid assets + Real estate + Personal possessions + Investment assets
= $4,500 + $148,000 + $62,000 + $73,000
= $287,500
Total liabilities:
= Current liabilities + Long term liabilities
= $7,500 + $98,000
= $105,500
Net worth:
= Total assets - Total liabilities
= $287,500 - $105,500
= $182,000
The equilibrium price of peanut butter is $5. A study comes out that says the fat in peanut buffer is good for your heart. Holding all other factors constant, which of the following scenarios could happen?
a. The price of peanut butter increases to $7 because of a supply shift.
b. The price of peanut butter decreases to $4 because of a supply shift.
c. The price of peanut butter decreases to $4 because of a demand shift.
d. The price of peanut butter increases to $7 because of a demand shift.
e. The price of peanut butter increases to $7 because of a demand AND a supply shift.
Answer:
The equilibrium price of peanut butter is $5. A study comes out that says the fat in peanut buffer is good for your heart. Holding all other factors constant, which of the following scenarios could happen?
The price of peanut butter increases to $7 because of a demand AND a supply shift
Explanation:
As a result of price increment, there would be a shift in the demand and supply. the increase in demand as a result of health importance would directly cause an increase in supply for the increase in demand to be met.
If a study comes out claiming that the fat in peanut butter is good for your heart, the demand for peanut butter would increase, leading to a higher price and quantity of peanut butter.
Explanation:In this scenario, the equilibrium price of peanut butter is $5. If a study comes out that says the fat in peanut butter is good for your heart, it would likely increase the demand for peanut butter. This would result in an increase in both the price and quantity of peanut butter, as the demand curve shifts to the right.
So, the correct answer is d. The price of peanut butter increases to $7 because of a demand shift.
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A portfolio has 30% of its value in IBM shares and the rest in Microsoft (MSFT). The volatility of IBM and MSFT are 35% and 30%, respectively, and the correlation between IBM and MSFT is 0.5. What is the standard deviation of the portfolio excel?
The portfolio's standard deviation is calculated using a designated formula that incorporates the weights of the stocks in the portfolio, their individual volatilities, and their correlation. Substituting the given values into this formula will provide the standard deviation.
Explanation:To find the standard deviation of the portfolio, we first need to consider the weights of each stock in the portfolio and their respective volatilities. The weight of IBM (x) is 30% and Microsoft (y) is 70%. The volatilities, or measures of risk, for IBM and Microsoft are 35% and 30% respectively. The correlation between IBM and Microsoft, which measures how the two stocks move in relation to each other, is given as 0.5.
Given these values, we can use the portfolio standard deviation formula, which is represented as:
σp = sqrt[(x^2)*(σ1^2) + (y^2)*(σ2^2) + 2*x*y*corr(1,2)*σ1*σ2]
where σp is the portfolio standard deviation, x and y are the weights, σ1 and σ2 are the standard deviations (volatilities) of the two stocks, and corr(1,2) is the correlation between the two stocks.
You need to plug the given values for the weights, volatilities and correlation into the formula. Remember, when computing the result, the volatility values should be expressed in decimal form, i.e., 35% would be 0.35.
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Augi is the hottest new pop singer, but her agent discovers that Internet sales of Augi's music have been poor due to Internet piracy. However, concerts are regularly sold out and merchandise (such as T-shirts) sells well. If Augi wants to enhance profits, economists would most likely recommend that she:
Answer:
The correct answer is letter "C": keep prices of downloads low and raise prices for concerts and merchandise.
Explanation:
To maximize profits, Augi's agent should not stop doing any of the commercial activities the pop singer has been carrying out. However, a way to deal with Augi's music internet piracy, the agent could lower the online-song prices but the "losses" can be compensated by raising the concert ticket prices and the singer's merchandise sold there since most of Augi's concerts are sold-outs.
The government has the ability to influence the level of output in the short run using monetary and fiscal policy. There is some disagreement as to whether the government should attempt to stabilize the economy.
Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply.
a.Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses.
b. The Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates.
c. Changes in government purchases and taxation must be passed by both houses of Congress and signed by the president.
d. Businesses make investment plans many months in advance.
Which of the following are examples of automatic stabilizers? Check all that apply.
a. Unemployment insurance benefits
b. Personal income taxes
c. The discount rate
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.
Choose the ideal cost of quality breakdown from the following options.
a. Prevention 15%, Appraisal 35%, Failure 50%
b. Prevention 5%, Appraisal 45%, Failure 50%
c. Prevention 50%, Appraisal 35%, Failure 15%
d. Prevention 25%, Appraisal 50%, Failure 25%
Answer:
The correct option is c.
Prevention 50%, Appraisal 35%, Failure 15%
Explanation:
A quality breakdown should have higher percentage of prevention, follow by Appraisal ,then small percentage of failures due to unforseen occurrences.
Answer:
Options A and B both represent ideal cost of quality (CoQ) breakdowns.
Explanation:
In trying to determine the financial benefit of quality in an organization, certain models can be adopted. One such model is the PAF model.
The PAF model tracks the resources spent in ensuring quality by preventing the occurrence of bad quality, appraising the products and processes and the internal and external costs of failure. It accounts for all of the activities that any typical company would perform in the name of providing good products or services to customers.
Prevention refers to costs associated with preventing a quality problem from occurring in the first place. Typical costs that are included in this category are; training, procedure writing, ISO related costs, and process or equipment automation.
Appraisal refers to any activity aimed at inspecting the quality of the product or service including calibration, instrumentation, and inspection and test personnel.
Internal Failure are those costs associated with recognizing a poor quality characteristic exists BEFORE the product leaves the factory. The most common cost in this category is scrap, followed closely by rework costs.
External failure is failure of a product or service at the delivery point or usage point of the customer. At this point, the product is fully burdened with cost, including transportation and storage costs. Reputation is impacted here too.
[tex]CoQ = Prevention + Appraisal + Failure[/tex]
The point where the sum of Prevention and Appraisal cost is equal to the Failure cost is referred to as minimal or ideal Cost of Quality point.
[tex]Prevention + Appraisal = Failure[/tex]
Clearly, in option A, [tex]15%+ 35% = 50%[/tex]
and in option B, [tex]5% + 45% = 50%[/tex].
Andy "Nard Dog" Bernard graduated from Cornell in May of 2018 with a BA in Women's Studies. As a graduation gift, Nard Dog's father, a widower, gave him an old Toyota Prius because, according to the father, "the Ferarri is more your brother's style and the old Prius reminds me of you." The Prius was originally purchased 8 years ago for $33,000 and today it is worth $16,000.
1. How much of the gift is subject to the gift tax?
2. If Andy's father sold the Prius for $16,000 and then gave Andy the proceeds from the sale, how much of the gift would be subject to federal gift taxes?
3. If Andy's father sold the Prius for $16,000 and then gave the proceeds from the sale to Cornell to pay for Andy's graduate school tuition, how much of the gift would be subject to federal gift taxes?
Solution:
1. Amount of gift subject to gift tax is only $ 1,000.
In 2018, the gift tax exclusion limit is $ 15,000. Hence, only the amount over and above $ 15,000 is subject to gift tax and IRS form 109 to be filled.
Here, the fair value of car is considered as the worth of gift.
So, taxable amount of gift is $ 16,000 - $ 15,000 = $ 1,000.
2. Amount of gift subject to gift tax = $ 1,000
The gift tax provisions will not change even if Andy's father gifted him a car or in terms of sale proceeds (cash).
Any asset money or money's worth is given to another person where full consideration is not received back is a gift.
3. If Andy's father give sale proceeds to Cornell, Amount of gift subject to federal gift tax = $ 0
Any amount given directly to an educational institution to pay tution fees as a gift is exempt from gift tax.
Here, Andy's father directly give the sale proceeds of $ 16,000 to Cornell as a gift for his further studies, that amount is exempt from gift tax.
The portion of the gift subject to gift tax depends on the value of the gift and the annual exclusion limit. If the gift is below the annual exclusion limit or qualified education expense, no gift taxes would be owed.
Explanation:1. The gift tax applies to the portion of the gift that exceeds the annual gift tax exclusion limit. For 2018, the annual exclusion limit is $15,000 per recipient. Since the value of the Prius is $16,000, only $1,000 would be subject to gift tax.
2. If Andy's father sold the Prius for $16,000 and then gave him the proceeds, the gift would still be $16,000. However, since it is below the annual exclusion limit, no federal gift taxes would be owed.
3. If Andy's father sold the Prius for $16,000 and then gave the proceeds to Cornell for Andy's graduate school tuition, the gift would still be $16,000. However, since it is a qualified education expense, it would not be subject to federal gift taxes.
The net present value of a proposed investment is negative. Therefore, the discount rate used must be:
A. greater than the project's internal rate of return.
B. less than the project's internal rate of return.
C. greater than the minimum required rate of return.
D. less than the minimum required rate of return.
Answer:
A. greater than the project's internal rate of return.
Explanation:
Net present value method: In this method, the initial investment is subtracted from the discounted present value cash inflows. If the amount comes in positive than the project is beneficial for the company otherwise not. It shows the inverse relationship between the net present value and the discount rate
The computation of the Net present value is shown below
= Present value of all yearly cash inflows after applying discount factor - initial investment
The discount factor should be computed by
= 1 ÷ (1 + rate) ^ years
Internal rate of return: It is that rate of return in which the net present value is zero. i.e NPV = zero
On their second date, Colby and Mac spend a considerable amount of time talking about their pasts, revealing their likes and dislikes, and exploring their compatibilities. Colby and Mac's interactions are indicative of which stage of relationship development?
contact
involvement
intimacy
dissolution
Answer:
The correct answer is letter "B": involvement.
Explanation:
In the involvement stage of relationships, people share personal information in detail such as past experiences and they start to show each other emotions and feelings. According to specialists, this happens because both parties are measuring the other's interest to find out how far the relationship could go.
he demand for labor is L = 4000minus300w, where L is the number of workers demanded and w is the hourly wage rate. The supply of labor is L = 200w. The equilibrium wage rate in this market is $ 8, and the equilibrium quantity of labor is 1600 workers. (Enter your responses as integers.) A minimum wage law is passed that sets the minimum wage at $9 per hour. As a result, 1300 workers are demanded and 1800 workers are supplied, so unemployment is 500workers. (Enter your responses as integers.) Do all workers benefit from the minimum wage law? No, because not everyone can find work at the higher wage. Which group of workers will have the least difficulty finding work at the minimum wage? A. Highly educated workers. Your answer is correct.B. Low skilled workers. C. Young and inexperienced workers. D. All of the above. The deadweight loss from the minimu
Answer:
Please find the detailed answer as follows:
Explanation:
The deadweight loss for the given information is = 1/2*2.5*300 = $375
The supply of labor of 1800 will have wage rate 1300 = 200*w
or w = 1300/200 = $6.5
Then the area of shaded portion in the figure or the deadweight loss will be 1/2*base(9-6.5) *altitude (1600-1300).
The establishment of a minimum wage leads to unemployment among workers and deadweight loss in the labor market, with highly educated workers facing the least difficulty in finding employment.
Explanation:The introduction of a minimum wage law sets the price of labor above the equilibrium, causing the quantity demanded by employers to fall and the quantity supplied by workers to rise, resulting in unemployment. At a minimum wage of $9, 1300 workers are demanded while 1800 are supplied, creating unemployment of 500 workers. Not all workers benefit from the minimum wage law; in fact, it often leads to a surplus of labor where some workers struggle to find employment.
When considering which group of workers will have the least difficulty finding work at the minimum wage, it is typically highly educated workers who fare better due to their qualifications and experience compared to low-skilled or young and inexperienced workers.
The deadweight loss in the labor market arises because the minimum wage creates a gap between the quantity of labor supplied and the quantity demanded, leading to inefficient allocation of resources and potential losses in welfare for both workers and employers.
Ginger, Inc., has declared a $5.70 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 20 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid.
The company's stock sells for $94.15 per share, and the stock is about to go ex dividend. What do you think the ex-dividend price will be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$89.59
Explanation:
The computation of the ex-dividend price would be
= Sale price of the stock - after-tax dividend
where,
The sale price of the stock would be $94.15
And, the after-tax dividend would be
= Dividend per share × (1 - tax rate)
= $5.70 × (1 - 0.20)
= $5.70 × 0.80
= $4.56
Now put these values to the above formula
So, the value would equal to
= $94.15 - $4.56
= $89.59
The ex-dividend price of Ginger, Inc. would be $89.59 per share after accounting for a 20% tax on its declared $5.70 dividend. This price represents the stock's value after the dividend's after-tax amount has been subtracted from its current price.
Explanation:The question involves the concept of an ex-dividend price, which is the price that a stock typically drops to after a dividend is paid out. In this scenario, Ginger, Inc. has declared a $5.70 per share dividend. Since capital gains are not taxed but dividends are taxed at a rate of 20%, investors will receive only $5.70 - ($5.70 × 0.20) = $4.56 per share after taxes. To find the ex-dividend price, we subtract this after-tax dividend from the stock's current price of $94.15. Therefore, the ex-dividend price would be $94.15 - $4.56 = $89.59.
To illustrate further, consider a scenario where an investor buys a share for $100 with an expectation of a $6.00 dividend. If the stock price rises to $105 and they sell, they receive a capital gain in addition to the dividend. Similarly, if they bought a share of Wal-Mart for $45 and sold it for $60, the $15 profit is also a capital gain. Whether it's an increase in stock value or receiving dividends, both contribute to the investor's rate of return.
Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl-Hirschman index of 2,765. Case’s share of that market was 22 percent, while Fiat comprised just 12 percent of the market. If approved, by how much would the post merger Herfindahl-Hirschman index increase?
Answer:
The Post Merger Herfindahl-Hirschman index will increase by 528 Points
Explanation:
Herfindahl-Hirschman index or simply the HH Index measures a market's level of competitiveness based on the number of firms participating in the industry.
HH Index has a maximum of 10,000 points for a market that is dominated by one firm and continues to reduce and tend towards 0 as the number of firms with equal sizes in the industry increases. In other words, the increase in an industry's HH Index is a function of the decrease in the number of firms in the industry and the disparities in sizes among the firms in the industry.
For acceptable levels of HH Index, the general consideration is that a market with HH Index between 1,500 and 2,500 has a moderate concentration, while any market with HHI higher than 2,500 points is highly concentrated.
To the Question,
the Success of the Merger between Fiat and Case would reduce the number of firms in the market and this will lead to an increased HHI,The formula for increase in HH Index==10,000 (Maximum HHI Points) [(22% (Case's Market Share + 12% (Fiat's Market Share)^2 - (22%)^2- (12%)^2]= 10,000 [(0.22 + 0.12)^2 - (0.22)^2 - (0.12)^2]=10,000 (0.0528)=528 PointsThis means the Post Merger HH Index will increase by 528 Points from 2,765 to 3, 293 (2,765+528)The Herfindahl-Hirschman Index (HHI) post the merger between Fiat and Case with market shares of 12% and 22% respectively, increases by 532.
Explanation:Herfindahl-Hirschman Index (HHI) is used to measure the concentration of market by adding the square of the market share of each firm in the industry. In this case, there is a merger between Fiat and Case with market shares of 12% and 22% respectively. You calculate market concentration post-merger by squaring the new combined market share of the merged entity (Fiat-Cases), and add it to the HHI of the other remaining firms. The increased HHI after the merger can be calculated as follows: ((12 + 22)^2 - (12^2 + 22^2)) = (34^2 - (144 + 484)) = 1160 - 628 = 532. Hence, the post merger Herfindahl-Hirschman index would increase by 532.
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Silver Mining is opening a new mineral extraction facility in the local town and will employ several thousand people. They have decided to install scrubbers on the smokestacks of their facility in order to protect the environment, even though they are not required by the law to install them. This is an example of:
Final answer:
Silver Mining's installation of scrubbers on smokestacks at a new facility is an example of corporate environmental responsibility aimed at reducing air pollution.
Explanation:
When Silver Mining opens a new mineral extraction facility and voluntarily installs scrubbers on their smokestacks without a legal requirement, they are engaging in corporate environmental responsibility. Scrubbers are used to clean emissions such as SO₂, NOx, and particulate matter before they enter the atmosphere. This decision reflects a commitment to reducing air pollution and protecting both the environment and local population's health, which could also prevent future environmental damage and public health issues, such as those experienced in communities near mining operations, as described in the provided references.
Final answer:
Silver Mining's installation of scrubbers is a form of corporate environmental responsibility that exceeds legal requirements to reduce pollution from their new mineral extraction facility, showing commitment to protecting the environment and public health.
Explanation:
The decision by Silver Mining to install scrubbers on the smokestacks of their new mineral extraction facility, even when not legally required to do so, is an example of corporate environmental responsibility. This proactive step goes beyond compliance and demonstrates a commitment to reducing the environmental impact of their operations. Scrubbers are technologies that clean emissions such as sulfur dioxide (SO₂), nitrogen oxides (NOx), particulate matter, and mercury from the smoke before it is released into the atmosphere. Power plants commonly use these devices to minimize air pollution. While other strategies may also achieve pollution reduction, such as switching to lower sulfur coal or using renewable energy, the installation of scrubbers is a direct method that addresses emissions at the source.
Environmental challenges associated with extractive industries, like mining, have historically led to significant health and environmental issues for local communities. These include air and water contamination from harmful chemicals and the degradation of land. Silver Mining's installation of scrubbers represents a trend where companies are recognizing the importance of not just meeting legal requirements, but also engaging in practices that safeguard the environment and public health.
the risk that a portfolio's return will underperform the benchmark return is called the ____.
Answer:
tracking error
Explanation:
As per the subject matter of finance, tracking error refers to the risk metric in a stock portfolio related to the portfolio administrator's actively managed funds choices; it shows how strongly a portfolio matches the standard to which it is thoroughly tested.
The most common indicator is perhaps the standard deviation of the portfolio-index return gap.Tracking error relates to the measure of the divergence from the baseline. Tracking error will not take into account risk (return) which is just a market activity feature.
An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary.
Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity.
(a) Payment of interest on notes payable. Financing activityOper. activity(loss); invest. activity(cash proceeds from sale)Operating activityInvesting activityNoncash investing and financing activity
(b) Exchange of land for patent. Operating activityInvesting activityOper. activity(loss); invest. activity(cash proceeds from sale)Financing activityNoncash investing and financing activity
(c) Sale of building at book value. Investing activityOperating activityNoncash investing and financing activityOper. activity(loss); invest. activity(cash proceeds from sale)Financing activity
(d) Payment of dividends. Financing activityOperating activityNoncash investing and financing activityInvesting activityOper. activity(loss); invest. activity(cash proceeds from sale)
(e) Depreciation. Operating activityInvesting activityFinancing activityOper. activity(loss); invest. activity(cash proceeds from sale)Noncash investing and financing activity
(f) Receipt of dividends on investment in stock. Investing activityFinancing activityOper. activity(loss); invest. activity(cash proceeds from sale)Operating activityNoncash investing and financing activity
(g) Receipt of interest on notes receivable. Noncash investing and financing activityOper. activity(loss); invest. activity(cash proceeds from sale)Investing activityFinancing activityOperating activity
(h) Issuance of capital stock. Investing activityOper. activity(loss); invest. activity(cash proceeds from sale)Financing activityOperating activityNoncash investing and financing activity
(i) Amortization of patent. Noncash investing and financing activityInvesting activityOper. activity(loss); invest. activity(cash proceeds from sale)Operating activityFinancing activity
(j) Issuance of bonds for land. Oper. activity(loss); invest. activity(cash proceeds from sale)Operating activityFinancing activityInvesting activityNoncash investing and financing activity
(k) Purchase of land. Financing activityOper. activity(loss); invest. activity(cash proceeds from sale)Investing activityOperating activityNoncash investing and financing activity
(l) Conversion of bonds into common stock. Financing activityOperating activityInvesting activityNoncash investing and financing activityOper. activity(loss); invest. activity(cash proceeds from sale)
(m) Loss on sale of land. Noncash investing and financing activityInvesting activityOperating activityOper. activity(loss); invest. activity(cash proceeds from sale)Financing activity
(n) Retirement of bonds. Noncash investing and financing activityOper. activity(loss); invest. activity(cash proceeds from sale)Investing activityFinancing activityOperating activity
Answer:
Explanation:
There are three types of activities in the cash flow statement which are described below:
1. Operating activities: It includes those transactions which affect the working capital after net income. The increase in current assets and a decrease in current liabilities would be deducted whereas the decrease in current assets and an increase in current liabilities would be added.
These changes in working capital would be adjusted. Moreover, the depreciation expense is added to the net income
2. Investing activities: It records those activities which include purchase and sale of the long term assets. The purchase is an outflow of cash whereas sale is an inflow of cash
3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance. The issue of shares is an inflow of cash whereas redemption and dividend is an outflow of cash.
So, the categorization is shown below:
(a) Payment of interest on notes payable - Operating activity
(b) Exchange of land for patent - non- cash investing and financing activity
(c) Sale of building at book value - Investing activity
(d) Payment of dividends - Financing activity
(e) Depreciation - Operating activity
(f) Receipt of dividends on investment in stock - Operating activity
(g) Receipt of interest on notes receivable - Operating activity
(h) Issuance of capital stock - Financing activity
(i) Amortization of patent - Operating activity
(j) Issuance of bonds for land - Non-cash investing and financing activity
(k) Purchase of land - Investing activity
(l) Conversion of bonds into common stock - Non-cash investing and financing activity
(m) Loss on sale of land - Operating activity
(n) Retirement of bonds. - Financing activity
On December 1, Williams Company borrowed $45,000 cash from Second National Bank by signing a 90-day, 9% note payable. a. Prepare Williams' journal entry to record the issuance of the note payable. b. Prepare Williams' journal entry to record the accrued interest due at December 31. c. Prepare Williams' journal entry to record the payment of the note on March 1 of the next year.
Answer:
Explanation:
The journal entries are shown below:
a. Cash A/c Dr $45,000
To Notes payable A/c $45,000
(Being note is issued for cash)
b. Interest expense A/c Dr $333
To Interest payable A/c $333
(Being accrued interest adjusted)
The computation is shown below:
= Principal × rate of interest × number of days ÷ (total number of days in a year)
= $45,000 × 9% × (30 days ÷ 365 days)
= $333
The 30 days is calculated from December 1 to December 31
(C) Interest expense A/c Dr $665.75
Interest payable A/c Dr $333
Notes payable A/c Dr $45,000
To Cash A/c $45,998.75
(Being cash is paid on maturity)
The computation is shown below:
= Principal × rate of interest × number of days ÷ (total number of days in a year)
= $45,000× 9% × (60 days ÷ 365 days)
= $665.75
From January 1 to March 1 it would be 60 days
We assume 365 days a year.
Hancock Inc. retains most of its earnings. The company currently has earnings per share of $11. Hancock expects its earnings to grow at a constant rate of 2 percent per year. Furthermore, the average PE ratio of all other firms in Hancock's industry is 12. Hancock is expected to pay dividends per share of $3.50 during each of the next three years. If investors require a 10 percent rate of return on Hancock stock, a fair price for Hancock stock today is ___A) 113.95
B) 111.32
C) 131.49
D) none of the above
Answer:
D1 = $3.50
D2 = $3.50
D3 = $3.50
Ke = 10% = 0.1
Po = D1 + D2 + D3
(1+ke) (1+ke)2 (1+ke)3
Po = $3.50 + $3.50 + $3.50
(1+0.1) (1+0.1)2 (1+0.1)3
Po = $3.18 + $2.89 + $2.63
Po = $8.70
None of the above
Explanation:
In this scenario, we need to discount the dividend in each year by the required at rate of return of 10%. The aggregate of the price obtained as a result of discounting in year 1 to year 3 gives the current market price.