Answers
Answer:
The Elasticity of the call option = [tex]\mathbf{ 5.06 \%}[/tex]
Explanation:
From the given information:
For $1 change in stock price
the percentage of change in stock price = ΔS/S
ΔS/S = (1× 100)/47 = 2.127659574
ΔC = hedge ratio × ΔS
ΔC = 0.7 × 1
ΔC = 0.7
However , the percentage change in the stock call option price = ΔC/C
= (0.7 × 100) / 6.50
= 70/6.50
= 10.76923077
∴
The Elasticity of the call option = [tex]\mathbf{\dfrac{percentage \ change \ in \ the \stock \ call \ option \ price }{percentage \ change \ in \ the \ stock \ price}}[/tex]
The Elasticity of the call option = [tex]\mathbf{ \dfrac{10.76923077 }{2.127659574}}[/tex]
The Elasticity of the call option = [tex]\mathbf{ 5.06 \%}[/tex]
OR
The Price Elasticity of the call option can be computed by using EXCEL FUNCTION(=B3*(B4/B1))
The illustration to that can be seen in the diagram attached below.
The Elasticity of the call option [tex]\simeq[/tex] 5.06% by using EXCEL FUNCTION.
Related Questions
Suppose the total deposits in the Last Bank of Commerce are $100,000, and $20,000 of the total deposit is set aside as reserves required by the Federal Reserve. Based on this information, the required reserve ratio is:
A. 20
B. $20,000
C.30
D.10
Answers
Answer:
A. 20
Explanation:
The reserve ratio= Reserve required / Total deposit × 100
= $20,000 / $100,000 * 100
= 1 / 5 *100
= 100 / 5
= 20%
The answer is A. 20
The reserve ratio also known as cash reserve is the portion of deposits that commercial banks must withhold or keep rather than lend out or invest as directed by the central bank of a country.
"A 55-year old individual has just retired after working for the same employer for 20 years. She will collect an annual pension benefit of $55,000, but is not yet ready to stop working.She has lined up a part-time job that will pay $4,000 this coming year. How much can she contribute to a Traditional Individual Retirement Account for her first year in retirement?"
Answers
Answer:
$4,000
Explanation:
Based on this scenario, this individual would be able to contribute a total of $4,000 to a Traditional Individual Retirement Account for this year. This is because a traditional IRA allows you to contribute 100% of your earned income up to a capped $5,500 per year but does not allow you for pension income contributions. Therefore this individual cannot contribute any of the $55,000 but can contribute all of the $4,000 she earned since she does not reach the limit.
A group of civic-minded merchants in Eldora organized the Committee of 100 for establishing the Community Sports Club, a not-for-profit sports organization for local youth. Each of the committee’s 100 members contributed $1,000 toward the club’s capital and, in turn, received a participation certificate. In addition, each participant agreed to pay dues of $200 a year for the club’s operations. All dues have been collected in full by the end of each fiscal year ending March 31. Members who have discontinued their participation have been replaced by an equal number of new members through transfer of the participation certificates from the former members to the new ones. Following is the club’s trial balance for April 1, 20X2:
Debit credit
Cash 90000
Investment 58000
Inventories 5000
Land 10000
Building 164000
Accumulated depreciation---building 130,000
Furniture and equipment 54000
Accumulated depreciation furniture and equipment 46000
Accounts payable 12000
Participation certificates 100000
Cumulative excess of revenue over expenses 12000
Toatal 300000 300000
Transactions for the year ended March 31, 20X3, follow:
Adjustment Data
1. Investments are valued at market, which totaled $65,000 on March 31, 20X3. There were no investment transactions during the year.
2. Depreciation for year: Building .......... $4,000 Furniture & equipment ..... 8,000
3. Allocation of depreciation: House expenses ...... $9,000 Snack bar & soda fountain ... 2,000 General and administrative ... 1,000
4. Actual physical inventory on March 31, 20X3, was $1,000 and pertains to the snack bar and soda fountain.
Required:
a. Record the transactions and adjustments in journal entry form for the year ended March 31, 20X3. Omit explanations.
b. Prepare the appropriate all-inclusive statement of activities for the year
Answers
Answer:
Community Sports Club
a. Adjusting Journal Entries on March 31, 20x3:
Description Debit Credit
Investment Account $7,000
Unrealized Investment Gains $7,000
Depreciation Expense $12,000
Accumulated Depreciation - Building $4,000
Acc. Depreciation - Furniture & Equipment 8,000
House Expenses $9,000
Snack bar & soda fountain 2,000
General and administrative 1,000
Depreciation Expenses $12,000
Cost of Inventory sold $4,000
Inventory $4,000
b. Financial Statement of Activities for the year ended March 31, 20x3:
Cumulative excess of revenue over expenses $12,000
Cost of Inventory Sold (4,000)
Depreciation Expenses:
House Expenses (9,000)
Snack bar & soda fountain (2,000)
General and administrative (1,000)
Cumulative excess of revenue over expenses ($4,000)
Explanation:
Data and Calculations:
1. Community Sports Club
Unadjusted Trial balance for April 1, 20X2:
Debit Credit
Cash $9,000
Investment 58,000
Inventories 5,000
Land 10,000
Building 164,000
Accumulated depreciation---building $130,000
Furniture and equipment 54,000
Accumulated depreciation furniture & equipment 46,000
Accounts payable 12,000
Participation certificates 100,000
Cumulative excess of revenue over expenses 12,000
Total $300,000 $300,000
2. Adjusted Trial Balance for March 31, 20x3:
Debit Credit
Cash $9,000
Investment 65,000
Inventories 1,000
Land 10,000
Building 164,000
Accumulated depreciation---building $134,000
Furniture and equipment 54,000
Accumulated depreciation furniture & equipment 54,000
Accounts payable 12,000
Participation certificates 100,000
Unrealized Investment Gain 7,000
Depreciation Expenses:
House 9,000
Snack bar & Soda Fountain 2,000
General and Administrative 1,000
Cost of Inventory Sold 4,000
Cumulative excess of revenue over expenses 12,000
Total $319,000 $319,000
3. The Club's Statement of Activities is like the income statement of a business entity. This statement reports the revenues and expenses of the club and the changes in the net assets of the company, like depreciation expenses and cost of inventory. Like the income statement it reports the excess of revenue over expenses or vice versa. The resulting figure (difference) is not called the net income or loss, but excess of revenue over expenses.
Sports Company makes snowboards, downhill skis, cross-country skies, skateboards, surfboards, and in-line skates. The company found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year:
Sales Operating Income Total Assets Crrent Liabilities ROI
Snow Sports 5,800,000 $ $ 990,000 4,400,000 500,000 22.5%
Non-Snow $ 8,800,000 $ 1,512,000 $ $ 6,300,000$ 750,000 24.0%
Sports
Tests management has specified a target 15% rate of return.
Compute each division's residual income. Interpret your results. Are your results consistent with each division's ROI?
Answers
Answer:
I. Residual Income:
Snow division
Residual Income = Operating income - (Total assets × Target rate of return)
Residual Income = $990,000 - ($4,400,000 * 15%)
Residual Income = $330,000
Thus, The residual income of the snow division is $330,000.
Non-snow division
Residual Income = Operating income - (Total assets × Target rate of return)
Residual Income = $1,512,000 - ($6,300,000 * 15%)
Residual Income = $567,000
Thus, The residual income of the non-snow division is $567,000
ii. The divisions have positive residual incomes, that is, both the divisions are earning income more than the target return on the investments.
iii. The results are consistent with the return on investment calculations of both the divisions.
________provide financing to new or emerging companies with high profit potential, for example, Uber Car Service. In return, these organizations expect a share of ownership in return for the financing they provide.
Answers
Answer:
Venture capital firms.
Explanation:
These are seen to be companies who are willing to risk up to about 50% of their equity in a business. A lot of venture capital companies are seen to be risk bearers in situations like this, thereby absorbing risks for their investments to push through. They are also seen in handling and pushing support for innovative and groundbreaking new companies. In as much as startup companies are creative thinkers, creating certain ideas, venture capital firms are seen as as vehicle by which those ideas make it to the marketplace and become integrated into everyday life.
Which of the following products probably accounted for by a company using a job order costing system? A) facial tissue B) Hershey Kisses C) Marshmallow Peeps D) A custom built house
Answers
Answer: D) A custom built house
Explanation:
Job Order Costing determines the cost of each specific good instead of grouping them all together. When making goods that vary in type, this is the best type of costing method to use as it will take into account the unique cost objects used.
Custom built houses will require cost objects that are different from standadized houses. A specific design will have to be used, non standard material and the like will be used as well. This means that when computing cost, it will have to be specific to the needs of the custom house so it is most probable that Job Order Costing was used.
Themarketpriceofasecurityis$50.Itsexpectedrateofreturnis14%.Therisk-freerateis6%, and the market risk premium is 8.5%. What will be the market price of the security if its correla- tion coefficient with the market portfolio doubles (and all other variables remain unchanged)? Assume that the stock is expected to pay a constant dividend in perpetuity.
Answers
Answer:
$31.82
Explanation:
market price $50
expected rate of return /Re) = 14%
Div = $50 x 14% = $7
risk free rate (Rf) = 6%
market premium (Rm - Rf) = 8.5%
beta = ?
14% = 6% + (beta x 8.5%)
beta x 8.5% = 14% - 6% = 8%
beta = 8% / 8.5 = 0.941
if beta doubles to 1.882, then Re will be:
Re = 6% + (1.882 x 8.5%) = 22%
new market price of the stocks = $7 / 22% = $31.818 = $31.82
The RC and More Superstore decides to track customer complaints as part of their ongoing customer satisfaction improvement program. After collecting data for two months, their check sheet appears as follows:
The RC and More Superstore decides to track customer complaints as part of their ongoing customer satisfaction improvement program. After collecting data for two months, their check sheet appears as follows:
Type of Problem Frequency
(number of times)
Batteries not included 6
Items damaged when received 21
Literature not included in box 9
Parts missing 13
Unit not working 1
Construct a Pareto chart including the cumulative % frequency. What is the cumulative percentage of the two leftmost bars?
Construct a Pareto chart including the cumulative % frequency.
What is the cumulative percentage of the two leftmost bars?
Answers
Answer: 68% (sixty Eight percent)
Explanation:
It should be noted that, if Pareto chart including the cumulative % frequency is being constructed. On this wise, the cumulative percentage of the two leftmost bars would be 68% (Sixty Eight percent).
It costs Homer's Manufacturing to produce baseballs and Homer sells them for a piece. Homer pays a sales commission of 5% of sales revenue to his sales staff. Homer also pays a month rent for his factory and store, and also pays a month to his staff in addition to the commissions. Homer sold baseballs in June. If Homer prepares a contribution margin income statement for the month of June, what would be his operating income?
Answers
Answer:
$105,075
Explanation:
The computation of the operating income is shown below:
Sales (4 × 69,500) $278,000
Less:Variable costs (0.95 × 69,500 + 5% × 278,000) $79,925
Contribution margin $198,075
Less: fixed cost (13,000 + 80,000) $93,000
Net operating income $105,075
We simply deduct the variable cost and the fixed cost from the sales to arrive at the net operating income
Mayfield Company sells two products, Blue models and Plaid models. Blue models sell for per unit with variable costs of per unit. Plaid models sell for per unit with variable costs of per unit. Total fixed costs for the company are . Mayfield Company typically sells Blue models for every Plaid models. What is
Answers
Answer:
B. 980 units
Explanation:
Note: This question is not complete. The full question is therefore presented before answering the question as follows:
Mayfield Company sells two products, Blue models and Plaid models. Blue models sell for $40 per unit with variable costs of $20 per unit. Plaid models sell for $54 per unit with variable costs of $25 per unit. Total fixed costs for the company are $24,500. Mayfield Company typically sells four Blue models for every four Plaid models. What is the breakeven point in total units? (Round any intermediary calculations to the nearest whole number).
A. 211 units
B. 980 units
C. 125 units
D. 3,063 units
The explanation of the answer is now given as follows:
Note: See the attached excel file for the calculation of the total contribution margin and total sales mix.
From the excel file, we have:
Total contribution margin = $196
Total sales mix = $8
We can now calculate weighted contribution margin as follows:
Weighted contribution margin = Total contribution margin / Total sales mix = $196 / 8 = $24.5, or $25 rounded to the nearest whole number
Therefore, we have:
Breakeven point in total units = Total fixed costs / Weighted contribution margin = $24,500 / $25 = 980 units
Therefore, the option is B. 980 units.
If a department that applies process costing starts the reporting period with 40,000 physical units that were 80% complete with respect to direct materials and 50% complete with respect to direct labor, it must add 8,000 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.
a. true
b. false
Answers
Answer:
True
Explanation:
Equivalent units are notional whole units which represent incomplete work and are used to apportion cost between work progress and completed work. These units are determined as follows:
Equivalent units = Degree of work done(%) × units of inventory
Equivalent units
Direct material:
Balance of work = 100-80 = 20%
Equivalent of work to be added = 20% × 40,000 = 8,000
Labour
Balance of work = 100-50= 50%
Equivalent of work to be added =50% × 40,000 = 20,000 units
Equivalent of work to be added(units)
Material 8000
Labour 20,000
8. A home inspection performed by a licensed inspector is
o a. a limited visual survey and basic performance evaluation of systems house.
o b. a Qull visual survey to ensure the house meets building code standards.
oc. a comprehensive investigation of the house using specialized equipment.
o d. an exploratory probe to determine the cause or effect of deficiencies noted.
Answers
Answer:
a. a limited visual survey and basic performance evaluation of systems in house.
Explanation:
A home inspection must be carried out by a certified and licensed inspector, but it is not a comprehensive investigation nor an exploratory probe of the house. It is basically a limited visual inspection carried out to determine if the house's systems (air conditioner, plumbing, and electrical) work properly, as well as to determine the condition of the walls, roof, windows, and other components of the house. A home inspection is generally requested when a house i being sold.
Splish Company provides the following information about its defined benefit pension plan for the year 2017. Service cost $110,000 Contribution to the plan 104,000 Prior service cost amortization 10,000 Actual and expected return on plan assets 30,000 Benefits paid 37,000 Plan assets at January 1, 2017 624,000 Projected benefit obligation at January 1, 2017 728,000 Accumulated OCI (PSC) at January 1, 2017 165,000 Interest/discount (settlement) rate 5% Compute the pension expense for the year 2017. Pension Expense for 2017 should be:
Answers
Answer: $155,520
Explanation:
Pension Expense = Service Cost - Expected return on plan assets + Prior service cost amortization + Interest cost
Interest Cost
= Interest rate * Projected benefit obligation
= 0.09 * 728,000
= $65,520
Pension Expense = 110,000 - 30,000 + 10,000 + 65,520
= $155,520
Both Nadia and Samantha are applying to insure their car against theft. Nadia lives in a secure neighborhood, where the probability of theft is 10%. Samantha lives in a lesser secure neighborhood where the probability of theft is 25%. Both Nadia and Samantha own cars worth $10,000, and are willing to pay $100 over expected loss for insurance.
If the insurance company can successfully screen both Nadia and Samantha into appropriate contracts, it would earn:_______
a. $3500 loss.
b. Between zero and $200.
c. Between zero and $200 loss.
d. $3500 gain.
Answers
Answer:
Option B, between zero and $200, is the right answer.
Explanation:
The probability that the car of Nadia can be theft = 10%
The probability that the car of Samantha can be theft = 25%
Here, both Nadia and Samantha are agreed or willing to pay the premium for insurance = $100
Since both pay the $100 premium each then the total revenue of the company will be $200. This is the maximum amount that the company can make. However, if the minimum amount is zero when both don’t take insurance. Thus, option B, between zero and $200 is correct.
Which of the following terms are associated with over-the-counter (OTC) trading?
1. Market maker.
2. Specialist.
3. Auction market.
4. Negotiated market.
A. 1 and 3.
B. 1 and 4.
C. 2 and 4.
D. 2 and 3.
Answers
Answer:
B. 1 and 4.
Explanation:
option 4) negotiated market
Since OTC trading involves stocks that generally come from companies that cannot trade in large stock exchanges, OTC traders usually negotiate directly with each other. In order for stocks to trade in large stock markets, they must fulfill certain requisites and many small companies cannot do it.
option 1) market maker
Traders that operate in secondary markets are called market makers. The two types of secondary markets are OTCs and exchange markets (large trading markets like NYSE, Nasdaq). Market makers also trade in primary markets. Traders that act on primary markets are the underwriters that carry out the IPOs.
Stocks that trade via OTC are typically smaller companies that cannot meet exchange listing requirements of formal exchanges. ... OTC securities trade by broker-dealers who negotiate directly with one another over computer networks and by phone using the OTCBB.
Zoe Corporation has the following information for the month of March: cost of direct materials used in product $15,401,direct labor $24,583, factory overhead $35,335, work in process inventory March 1 $20,021, work in process inventory, March 31 $20,681, finished good inventory, March 1 #24,889, Finished goods, March 31, $27,311, A, determine the cost of goods manufactured, B. determine the cost of goods sold.
Answers
Answers:
Calculation of cost of goods manufactured:
Particulars Amount(in $)
Cost of direct material $15,401
Add: Direct labour $24,583
Add: Factory overhead $35,335
Add: Work In process inventory, March 1 $20,021
Less: Work in process inventory, March 31 $20,681
Cost of goods manufactured $74,659
Calculation of Cost of goods sold:
Particulars Amount(in $)
Cost of goods manufactured $74,659
Add: Finished goods inventory, March 1 $24,889
Less: Finished goods inventory, March 31 $27,311
Cost of goods sold $72,237
Serena Medavoy will invest $5,890 a year for 17 years in a fund that will earn 12% annual interest. Click here to view factor tables If the first payment into the fund occurs today, what amount will be in the fund in 17 years
Answers
Answer:
$287,924.84
Explanation:
We are to calculate the future value of the annuity
The formula for calculating future value = A (B / r)
B = [(1 + r)^n] - 1
FV = Future value
P = Present value
R = interest rate
N = number of years
[(1.12)^17 - 1] / 0.12 = 48.883674
$5,890 x 48.883674 = $287,924.84
Sweeney pies has issued a zero-coupon 10-year bond that can be converted into 10 Sweeney shares. Comparable straight bonds are yielding 9%. Sweeney stock is priced at $63 a share. (Assume a face value of $1,000 and semi-annual compounding).
A. Suppose that you had to make a now-or-never decision on whether to convert or to stay with the bond. Which would you do?
1. Convert the bond
2. Stay with the bond
B. If the convertible bond is priced at $476, how much are investors paying for the option to buy Sweeney shares?
C. If, after one year, the value of the conversion option is unchanged, what is the value of the convertible bond?
Answers
Answer:
A.Convert the bond
B.$53.59
C. $514.01
Explanation:
a. Calculation for whether to convert or to stay with the bond.
First step
In a situation where the fair rate of return on a 10 year zero-coupon non-convertible bond is 9%, which means the price would be calculated as:
Using this formula
Price =(Face value/(1+Non-convertible bond)^Numbers of years
Let plug in the formula
Price =($1,000/1.09)^10
Price = $422.41
Second step is to calculate for the conversion value
Conversion value = 10×$63 shares
Conversion value= $630
If we convert the gain will be :
Gain=$630 - $422.41
Gain= $207.59
Based on the above calculation this mean you may convert and sell the $10 shares for the amount of $630 which will help you to buy a bond for the amount of $422.41
And in a situation were you decide not to convert, you will own a non-convertible bond of the amount of $422.41, based on this i will convert the bond.
b. Calculation for how much are investors paying for the option to buy Sweeney shares
Amount to be paid = ($476.00-$422.41)
Amount to be paid= $53.59
This means the Investors are paying the amount of $53.59
c. Calculation for the value of the convertible bond
First is to calculate for the value of a comparable non-convertible bon
Bond value = $1,000/1.09^9
Bond value = $460.42
Now let calculate for the value of the convertible bond
Value of the convertible bond = $460.42+ $53.59
Value of the convertible bond= $514.01
Therefore the Value of the convertible bond will be $514.01
Given that Unilever is viewed as being highly innovative in Brazil, does the video confirm this reputation. Wy or why not
Answers
Explanation:
Unilever is considered highly innovative in Brazil due to the development of different product lines according to the potential audience. That is, in Brazil the company produces product lines to reach different audiences, including people from lower classes.
This occurs in Brazil due to the fact that the country has a very diverse consumer audience according to income and preferences, which makes the company develop strategies to capture a larger part of the market and satisfy the needs of Brazilian consumers.
Chris purchased a 10 year 100 par value bond where 6% coupons are paid semiannually. Cheryl purchased a 100 par value bond where 6% coupons are paid semiannually. There is no maturity date or redemption value for Cheryl’s bond. Cheryl paid $100 for her bond. The yield for Chris’s bond is 80% of the yield for Cheryl’s bond. How much did Chris pay for his bond?
Answers
Answer:
The amount Chris pay for his bond = $109.44
Explanation:
Given that:
Chris purchased a 10 year 100 par value bond where 6% coupons are paid semiannually. Cheryl purchased a 100 par value bond where 6% coupons are paid semiannually.
The Price of the Cheryl's bond is 6% given that it is purchased at at par value where 6% coupons are paid.
Suppose The yield for Chris’s bond is 80% of the yield for Cheryl’s bond.
Then:
Price of the Cheryl's bond = Present Value of the coupon in perpetuity
∴
[tex]100=\dfrac{3}{Yield}[/tex]
Yield=[tex]\dfrac{100}{3}[/tex]
Yield =0.03
Yield = 3%
The Yield of Chris = 0.8 × 3
The Yield of Chris = 2.4% semiannual
However;
Present Value of the coupons is: [tex]PV= \dfrac{A*[ (1+r)^n -1]}{[(1+r)^n * r] }[/tex]
[tex]PV= \dfrac{3*[ (1+0.024)^{20} -1]}{[(1+0.024)^{20} *0.024 ] }[/tex]
[tex]PV= \dfrac{3*[ (1.024)^{20} -1]}{[(1.024)^{20} *0.024 ] }[/tex]
[tex]PV= \dfrac{3*[1.606938044 -1]}{[1.606938044 *0.024 ] }[/tex]
[tex]PV= \dfrac{3*[0.606938044]}{[0.03856651306 ] }[/tex]
[tex]PV= \dfrac{1.820814132}{0.03856651306 }[/tex]
PV = 47.21
The PV of the face value = [tex]\dfrac{100}{(1+r)^n}[/tex]
The PV of the face value = [tex]\dfrac{100}{(1+0.024)^{20}}[/tex]
The PV of the face value = [tex]\dfrac{100}{(1.024)^{20}}[/tex]
The PV of the face value = [tex]\dfrac{100}{1.606938044}[/tex]
The PV of the face value = 62.230
Finally:
The amount Chris pay for his bond = PV of the coupons + PV of the face value
The amount Chris pay for his bond = 47.21 + 62.230
The amount Chris pay for his bond = $109.44
When unit selling price remains the same and ________, then the contribution margin per unit decreases.
A: fixed costs increase
B: fixed costs decrease
C: variable costs per unit increase
D: variable cost per unit decrease
Answers
Answer:
C: variable costs per unit increase
Explanation:
When unit selling price remains the same and variable cost per unit increase, then the contribution margin per unit decreases.
An increase in variable costs when sales unit is same, will lead to decrease in contribution margin.
Contribution margin is calculated by subtracting variable costs from product's revenue and then dividing it by the product's revenue.
Mathematically,
Contribution Margin = (Sales Revenue - Variable Cost) / Sales Revenue.
If the desired daily output is 458 units, how many units must be started to allow for loss due to scrap? (Do not round intermediate calculations. Round up your final answer to the next whole number.)
Answers
Complete question:
Production process consists of a three step operation. Scrap rate is 19% for the first step and 11% for the other two steps.
If the desired daily output is 458 units, how many units must be started to allow for loss due to scrap? (Do not round intermediate calculations. Round up your final answer to the next whole number.)
Answer:
784 units
Explanation:
Given that:
Scrap rate at first step = 19%
Scrap rate at second step = 11%
Scrap rate at third step = 11%
Desired output unit = 458
After first step,
Material left= (100% - 19%) = 81%
After second step,
Material left = (100% - 11%) = 89%
After third step :
Material left = (100% - 11%) = 89%
Therefore, to compensate for scrap in the first step and attain desired output unit:
Units that must be started :
Desired output unit / (81%)*(89%)*(89%)
458 / (0.81)*(0.89)*(0.89)
458 / 0.583929
= 784.34193 units
= 784 units
Creative Sports Design (CSD) manufactures a standard-size racket and an oversize racket. The firm’s rackets are extremely light due to the use of a magnesium-graphite alloy that was invented by the firm’s founder. Each standard-size racket uses 0.125 kilograms of the alloy and each oversize racket uses 0.4 kilograms; over the next two-week production period only 80 kilograms of the alloy are available. Each standard-size racket uses 10 minutes of manufacturing time and each oversize racket uses 12 minutes. The profit contributions are $10 for each standard-size racket and $15 for each oversize racket, and 40 hours of manufacturing time are available each week. Management specified that at least 20% of the total production must be the standard-size racket. How many rackets of each type should CSD manufacture over the next two weeks to maximize the total profit contribution? Assume that because of the unique nature of their products, CSD can sell as many rackets as they can produce.
Answers
Answer:
165 oversize rackets = 32 machine hours (79.71% of total production)
42 standard size rackets = 7 machine hours (20.29% of total production)
total profit contribution = (165 x $15) + (42 x $10) = $2,895
Explanation:
materials machine hours profit
standard size 0.125 kg 1/6 $10
oversize 0.4 kg 1/5 $15
constraints 80 kilograms of materials
40 hours of manufacturing
profit per machine hour:
standard size $10 x 6 = $60 x 40 hours = $2,400 (total possible production = 240 rackets)
oversize $15 x 5 = $75 x 40 hours = $3,000 (total possible production = 200 rackets)
profit per kilogram of alloy:
standard size $10 / 0.125 = $80 x 80 kgs = $6,400 (total possible production = 480 rackets)
oversize $15 / .4 = $37.50 x 80 hours = $3,000 (total possible production = 200 rackets)
since the most important constraint is the manufacturing hours available, the company should try to produce the products that yield the highest contribution margin per machine hour. In this case, at least 20% of total production must be standard size rackets, so the remaining 80% should be oversize rackets that yield a higher profit.
165 oversize rackets = 32 machine hours (79.71% of total production)
42 standard size rackets = 7 machine hours (20.29% of total production)
total manufacturing time = 40 hours
if we produce 166 oversize rackets and 41 standard size rackets, total manufacturing time will exceed 40 hours (40.03 hours exactly).
The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20 percent next year and then decreasing the growth rate to a constant 5 percent per year. The company just paid its annual dividend in the amount of $1 per share. What is the current value of a share if the required rate of return is 14 percent?
Answers
Answer:
The price of the stock today is $13.33
Explanation:
The two stage growth model of DDM can be used to calculate the price of the share today. The DDM values a stock based on the present value of the expected future dividends from the stock. The price of this stock under this model can be calculated as follows,
P0 = D0 * (1+g1) / (1+r) + [ (D0 * (1+g1) * (1+g2) / (r - g2)) / (1+r) ]
Where,
g1 is the initial growth rate which is 20%g2 is the constant growth rate which is 5%r is the required rate of returnP0 = 1 * (1+0.2) / (1+0.14) + [ (1 * (1+0.2) * (1+0.05) / (0.14 - 0.05)) / (1+0.14) ]
P0 = $13.33
Pat has Been riding informal proposals for more than 20 years. At feels that many people forget the call for action and present the reader with the offer prior to signing a binding contract. What component is Pat focusing on. A. Request for authorization B. Budget C. Introduction D. Background
Answers
Answer:
D. Budget
Explanation:
Pat has Been riding informal proposals for more than 20 years. Pat feels that many people forget the call for action and present the reader with the offer prior to signing a binding contract.
This offer prior to signing a binding contract is a form of background work not an introduction neither is it request for authorization or budget.
It's not in the protocol of contract signing but it's a special way to have your contract signed.
Before a check authorization is issued, the following documents must be in agreement, except for the
a. receiving report.
b. purchase order.
c. invoice.
d. remittance advice.
Answers
Before a check authorization is issued, documents must be in agreement, except for the remittance advice . The appropriate response is option D.
What is remittance advice?A letter known as a remittance advise is one that a client sends to a supplier to let them know that their invoice has been paid. The remittance advice frequently comes with the customer's check when they pay with a check. The letter-like instruction might also be a voucher taped to the side or top of the check.
Remittance advice is a letter that a client sends to a supplier to confirm that they have paid their invoice in full. Remittance advice might be a paper-based document or an electronic notification.
Customers include their remittance advice with their payment so that suppliers can keep track of it. Despite the widespread use of digital payments nowadays, remittances assist in organizing and matching open invoices with payments, which It is primarily beneficial if you handle numerous payments from your consumers each day.
To learn more about remittance advice
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A method of allocating merchandise cost requiring each item sold and each item remaining in inventory to be separately identified with respect to its purchase cost is called the
Answers
Answer: Specific Identification
Explanation: When items in an inventory are valued singularly rather than being evaluated based on a grouped analysis. In the specific identification inventory valuation method, each singular item in an inventory is monitored and accounted for separately, each items is tagged with its own cost, amount left in inventory. The specific identification method seems quite tedious when dealing with relatively cheap items which is always numerous in units such as small items like shirts, pen and so on. However, it is very useful in the valuation of large, luxurious and expensive items.
What is the plowback ratio for a firm that has earnings per share of $2.68 and pays out $1.75 per share in dividends
Answers
Answer:
34.70%
Explanation:
Calculation for the plowback ratio
Using this formula
Plowback ratio=(Earnings per share-Pays out per share)/Earnings per share
Let plug in the formula
Plowback ratio = ($2.68 - $1.75)/$2.68
Plowback ratio =$0.93/$2.68
Plowback ratio = .3470 ×100
Plowback ratio =34.70%
Therefore Plowback ratio will be 34.70%
Stock in Cheezy-Poofs Manufacturing is currently priced at $80 per share. A call option with a $80 strike and 90 days to maturity is quoted at $3.20. Compare the percentage gains and losses from a $25,600 investment in the stock versus the option in 90 days for stock prices of $70, $80, and $90. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Leave no cells blank - be certain to enter "0" and select "None" wherever required. Input all amounts as positive values.)
Answers
Answer:
Price Stock Options
$70 -3200 -25600
$80 0 -25600
$90 3200 54400
Explanation:
Invested in stock
Number of units acquired = $25,600/80 = 320
Now if price goes down to $70 THEN loss will be
320 × (70-80) = - $3,200
percentage of loss will be 3,200/25,600 × 100 = 12.5%
If price stays at $80, then there will neither be a gain nor a loss
320 × (80-80) = 0
If price goes up to $90, then the gain will be
320 × (90-80) = $3,200
percentage of gain will be 3,200/25,600 × 100 = 12.5%
Invested in option
Number of options purchased = $25,600 / 3.20 = 8000
Now If price goes down to $70 then investor will not exercise option in which case loss will be equal to amount of premium paid which is - $25,600.
percentage of loss = 100%
If price stays at $80 even then investor will not exercise call option in which case loss will be equal to the amount of premium paid which is - $25,600
Percentage of loss = 100% loss
If price goes up to $90 then investor will exercise call option
Gain due to exercise of call option = 8000 × (100 - 90) = 80,000
Net gain = 80,000 - 25,600 = $54,400
Percentage gain = 54,400 / 25,600 = 212.5%
Umbridge Purses Unlimited sells purses with a sales price of $35 each. Each purse costs the company $20 to produce, and the store incurs a total of $300,000 in fixed costs each year. What is the yearly breakeven point in units?
a. 8,572 purses
b. 10,000 purses
c. 15,000 purses
d. 20,000 purses
e. None of the above
Answers
Answer:
Break-even point in units= 20,000 units
Explanation:
Giving the following information:
Selling price= $35
Unitary variable cost= $20 t
Total fixed cost= $300,000
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 300,000/ (35 - 20)
Break-even point in units= 20,000 units