Answer:
D.
It enforces that each group member's compensation depends in part on the group's overall productivity.
Explanation:
Zappos is an online company that retails shoes and clothes. They have an extremely flat organisational structure that promotes employee involvement in major business decisions.
For example it allows its customer service employees attend to customers in their own way rather than following a script.
One way Zappos has maintained organisational control is by each group member's compensation depending in part on the group's overall productivity.
This strategy ties the employee compensation to the company's performance, so they are motivated to put in their best.
You are choosing between these four investments and you want to be 95% certain that you do not lose more than 8.00% on your investment. Which investments could you choose?
Answer: B. Corporate Bonds and T-Bills
Explanation:
As you want to be 95% certain, this would require a 95% confidence interval.
With the given returns and standard deviations, the range of returns expected will be computed by;
Upper limit = Return + 2*SD
Lower limit Return - 2*SD
Stocks
Upper Limit = 18.37% + 2 (38.79%)
= 96.0%
Lower Limit = 18.37% - 2 (38.79%)
= -59.2%
S&P 500
Upper Limit = 11.84% + 2(20.01%)
= 51.9%
Lower Limit = 11.84% - 2(20.01%)
= -28.2%
Corporate Bonds
Upper Limit = 6.47% + 2(6.98%)
= 20.4%
Lower Limit = 6.47% - 2(6.98%)
= -7.5%
T-Bills
Upper Limit = 3.46% + 2(3.14%)
= 9.7%
Lower Limit = 3.46% - 2(3.14%)
= -2.8%
The lower limit show the lowest return achievable given a 95% confidence level.
Only Corporate Bonds and T-Bills will give a minimum that is above 8% so they should be chosen.
Which statement best describes an authoritarian style of communication
Answer:
High task-low relationship behavior, initiating a closed presentation
Explanation:
Authoritarian communication style, which is also popularly known as autocratic leadership is a type of communication style in which the leader holds rigid control over the team as he/she is directly responsible for taking decisions, regulating the actions, rules, methodologies. This is a 'high task and low-relationship behavior' communication style and initiates a closed control and presentation of procedures and policies. The expectations are very clear and close supervision of tasks is made by the leader to ensure maximum productivity.
You must evaluate a proposal to buy a new milling machine. The base price is $135,000 and shipping and installation costs would add another $8,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $94,500. The applicable depreciation rates are 33%, 45%, 15%, and 7% as discussed in Appendix 12A. The machine would require a $5,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $52,000 per year. The marginal tax rate is 35%, and the WACC is 8%. Also, the firm spent $4,500 last year investigating the feasibility of using the machine. 1. How should the $4,500 spent last year be handled? 2. What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow? 3. What are the project’s annual cash flows during Years 1, 2, and 3? 4. Should the machine be purchased? Explain your answer.
Answer & Explanation:
A.The 4,500 dollars spent can be considered as a sunk cost, which means it has been incurred but cannot be recovered and cannot be considered as a cash flow.
B.The initial investment outlay is the total cost of the machine's based price, the shipping and installation, and the additional working capital which all equals to $148,000
C.Year 1 - $49,584
Year 2 - $52,000
Year 3 - $100,720
D.Yes, the machine should be bought, the 8% WACC generates a positive net present value.
Rocky Mountain Bikes' Colorado warehouse has 50 Pack Rat Deluxe Bike Baskets in stock at a moving average price of $25.13 each. They purchase 300 from Rat-a-tat-tat Bike Products at $25.54 each and transfer 100 from their Texas warehouse where the moving average price is $25.25 each. Assuming all of the baskets mentioned above have been received in Colorado and there have been no sales from Colorado, what is the current moving average price and total inventory valuation for Pack Rat Deluxe Bike Baskets in the Colorado warehouse.
Answer:
Rocky Mountain Bikes
Current moving average price is:
$25.43
Total inventory valuation is:
$11,443.50
Explanation:
Colorado warehouse:
Item Qty Price Moving Total Total Value
average price Qty
Inventory 50 $25.13 50 $1,256.50
Purchase 300 $25.54 $25.48 350 $8,918.50
Transfer 100 $25.25 $25.43 450 $11,443.50
Rocky Mountain Bikes' Colorado warehouse uses the moving average price to value the inventory. The moving average price is computed by creating a constantly updated average price. This smoothens the price data.
you want to have $57,000 in your savings account 10 years from now, and you're prepared to make equal annual deposits into the account at the end of each year. If the account pays 7.9 percent interest, what amount must you deposit each year
Answer:
$2,271.50
Explanation:
Future value of annuity=Annuity[(1+rate)^time period-1]/rate
57,000=Annuity[(1.079)^10-1]/0.079
57,000=Annuity[(1.079)^9]/0.079
57,000=Annuity * 1.9824/0.079
57,000=Annuity * 25.093671
Annuity=57,000/25.093671
Annuity = 2271.489094
Annuity = $2,271.50 appr.
If there is an increase in the number of workers than all else equal the effect on capital per worker will be: _________
Answer: b. Negative
Explanation:
If there is more labor being employed while Capital remains the same then it would mean that the amount of Capital due to each worker will keep dropping i.e be negative.
This can present a problem because it will lead to less real wages for workers as well as less productivity for firms. Workers will typically seek to move to areas with high capital to labor rates as they seek to earn higher wages.
Summary posting from the sales journal normally would be completed in which of the following orders? a.Sales, Sales Tax Payable, and Accounts Receivable columns b.Sales Tax Payable, Sales, and Accounts Receivable columns c.Accounts Receivable, Sales, and Sales Tax Payable columns d.Accounts Receivable, Sales Tax Payable, and Sales columns
Answer: d.Accounts Receivable, Sales Tax Payable, and Sales columns
Explanation:
The Sales journal is used to record sales made on credit to the firm's customers. In posting in the sales journal, the proper format is to;
Post the amount including the sales tax in the Accounts Receivables Debit ColumnPost the Sales tax to the Sales Tax Payable Credit columnThe lastly post the Sales figure net of tax to the Sales Credit Column.d. Accounts Receivable, Sales Tax Payable, and Sales columns
The following information should be considered:
The Sales journal is applied to record sales made on credit to the customers. In posting in the sales journal, the proper format is to;Post the amount that involved the sales tax in the Accounts Receivables Debit Column
Then Post the Sales tax to the Sales Tax Payable Credit column
And, at last post the Sales figure net of tax to the Sales Credit Column.
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othman Incorporated has a $800,000 investment opportunity with the following characteristics: Sales $ 2,240,000 Contribution margin ratio 50% of sales Fixed expenses $ 1,008,000 The margin for this investment opportunity is closest to:
Answer:
5%
Explanation:
We have net operating income as sales x contribution margin. The fixed expense would be subtracted from the resulting value.
2,240000 * 0.5
= 1,112,000
1112000 - 1008000
= 112000
The margin =
112000/2240000
= 0.05
Also 5 percent
The margin for this investment opportunity is closest to 5 percent.
You buy 105 shares of Tidepool Co. for $45 each and 205 shares of Madfish, Inc., for $11 each. What are the weights in your portfolio?
Answer:
67.96% , 32.31%
Explanation:
105 shares of Tidepool is bought for $45 each
205 shares of Madfisg is bought for $11 each
The first step is to calculate the total value in the portfolio
= 105×$45
= $4,725
= 205×$11
= $2,255
Total value of the portfolio= $4,725+$2,255
= $6,980
Therefore, the weights in the portfolio can be calculated as follows
Tidepool corporation
= 105 × $45/$6980
= $4725/$6980
= 0.6796×100
= 67.96%
Madfish incorporation
= 205 × $11/$6980
= $2255/$6980
= 0.3231×100
= 32.31%
Hence the weights in the portfolio are 67.96% and 32.31%
On the basis of this information, what is LeCompte's optimal capital structure, and what is the firm's cost of capital at this optimal capital structure?
Answer:
Hello your question is incomplete below is the complete question
LeCompte Learning Solutions is considering making a change to its capital structure in hopes of increasing its value. The company's capital structure consists of debt and common stock. In order to estimate the cost of debt, the company has produced the following table: (Percent financed with debt (wd) 0.10, 0.20, 0.30, 0.40, 0.50) ; (Percent financed with equity (wc) 0.90, 0.80, 0.70, 0.60, 0.50) ; (Debt-to-equity ratio (D/S) 0.11, 0.25, 0.43, 0.67, 1.00) ; (Bond Rating AAA, AA, A, BBB, BB) ; (Before-tax cost of debt 7.0%, 7.2, 8.0, 8.8, 9.6) ... The company uses the CAPM to estimate its cost of common equity, rs. The risk-free rate is 5% and the market risk premium is 6%. LeCompte estimates that if it had no debt its beta would be 1.0. (Its "unlevered beta," bu, equals 1.0.) The company's tax rate, T, is 40%. ... On the basis of this information, what is LeCompte's optimal capital structure, and what is the firm's cost of capital at this optimal capital structure? a) wc = 0.9; wd = 0.1; WACC = 14.96% b) wc = 0.8; wd = 0.2; WACC = 10.96% c) wc = 0.7; wd = 0.3; WACC = 7.83% d) wc = 0.6; wd = 0.4; WACC = 10.15% e) wc = 0.5; wd = 0.5; WACC = 10.18%
Answer : wc = 0.6; wd = 0.4; WACC = 10.15% ( D )
Explanation:
Given data :
company's tax rate = 40% = 0.4
attached below is the tabular solution to the problem above
The formula for calculating ( Beta, Return and WACC on the table for each given D/E )
for Beta :
= 1 [ 1 + ( 1 - T ) (d/e) ]
d/e = debit to equity ratio
T = tax rate
for Return :
( risk free rate + market risk premium ) * beta
where risk free rate = 5%
market risk premium = 6%
for WACC:
Rd * Wd * ( 1 - company tax rate ) + return * WC
for D/E = 0.11
beta = 1[1 + (1-0.4)(0.11) ]
= 1.0667
return = (5% + 6%) (1.0667) = 11.40%
WACC = 7% * 0.1 * (1-0.4) + 11.40% * 0.9 = 10.68%
The option with the lowest WACC is the most suitable option hence we choose D
The method of accounting for long-term investments in equity securities that most closely fits the requirements of accrual accounting is the
Answer:
Equity Method
Explanation:
The reason is that the profit after tax earned during the period is added to the value of investment and the cash dividends received reduces the value of the equity investment. This is as per the guidelines of the accrual accounting which says that revenue must be recorded when they are earned and expenses must be recorded when they are incurred. Hence it is as per the guidelines of accrual accounting principles.
Regarding employment or association with attest clients, the employment of a former partner
by a client in a key position most likely impairs firm independence if
A. Team members have interactions with the former partner.
B. The former partner cannot influence the accounting firm’s operations.
C. Amounts are to be paid to the former partner based on a fixed formula.
D. The former partner consults with the accounting firm.
Answer:
D. The former partner consults with the accounting firm.
Explanation:
An attest client is defined as a person or entity that an attest activity is performed for.
An attest service is performed by a third party who provides an independent review of a client's business based on specific procedures.
For example when an auditor performs independent review of a company's financial records.
The relationship with an attest client must be carefully considered before an engagement is accepted.
So in this scenario if a former employee of a firm is employed by an attest client it will impair the firm's independence if the former partner still consults with the firm.
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.3 million. The fixed asset falls into the three-year MACRS class (MACRS schedule). The project is estimated to generate $1,720,000 in annual sales, with costs of $628,000. The project requires an initial investment in net working capital of $270,000, and the fixed asset will have a market value of $210,000 at the end of the project.
a. If the tax rate is 22 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to two decimal places, e.g., 1,234,567.89.)
b. If the required return is 10 percent, what is the project's NPV? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to two decimal places, e.g., 1,234,567.89.)
Answer:
a)
MACRS 3 year depreciation schedule
33.33% x $2,300,000 = $766,590
44.45% x $2,300,000 = $1,022,350
14.81% x $2,300,000 = $340,630
carrying value at end of year 3 = $170,430
net after tax cash flow from salvage value = $210,000 - [($210,000 - $170,430) x 22%] = $201,294.60
cash flows:
year 0 = -$2,300,000 - $270,000 = -$2,570,000
year 1 = [($1,720,000 - $628,000 - $766,590) x 0.78] + $766,590 = $1,020,410
year 2 = [($1,720,000 - $628,000 - $1,022,350) x 0.78] + $1,022,350 = $1,076,677
year 3 = [($1,720,000 - $628,000 - $340,630) x 0.78] + $340,630 + $201,294.60 + $270,000 = $1,397,993
b)
NPV = $297,794, and IRR = 16.12%
An investment of 1 will double in 27.72 years at a force of interest, δ. An investment of 1 will increase to 7.04 in n years at a nominal rate of interest numerically equal to δ and convertible once every two years. Calculate n.
Answer:
80
Explanation:
According to the given situation, the computation of n is shown below:-
EXP[27.72δ]=2
δ =0.025
m = 1 ÷ 2
(1 + 0.025 ÷ (1 ÷ 2))^n ÷ 2 = 7.04
n ÷ 2 × ln(1.05)=ln(7.04)
n ÷ 2=40
n = 80
Therefore for computing the n we simply applied the above formula i.e. by considering all the information given in the question
Hence,the n is 80
A company's expected receipts from sales and planned disbursements to pay bills is commonly called a:
Answer:
Cash budget.
Explanation:
A company's expected receipts from sales and planned disbursements to pay bills is commonly called a cash budget.
A cash budget can be defined as a budget consisting of expected cash receipts or estimation of the cash flows and planned disbursements to pay bills, for a business over a specific period of time.
In Financial accounting, a cash budget is typically used to determine whether a business firm has sufficient funds for its smooth operations and evaluate if cash are being spent judiciously or productively. A cash budget comprises of financial items such as costs incurred or expenses paid, revenues generated, payments and loan receipts collected.
Many firms attempt to distinguish or differentiate their product offerings through the use of __________ strategies. This involves establishing a mental image of the product offering relative to competing offerings in the minds of target buyers.A) product positioningB) brandingC) perceptual marketingD) image marketingE) comparative
Answer:
a
Explanation:
Positioning refers to the place that a product occupies in the minds of the customers and how it is distinguished from other products.
For example, a firm might attempt to distinguish itself from other products by claiming to be organic. This creates an image in the mind of consumers that the product is safe and healthy
What is the maximum amount a 45-year-old taxpayer and 45-year-old spouse can put into a Traditional or Roth IRA for 2016 (assuming they have sufficient earned income, but do not have an income limitation and are not covered by another pension plan)?
Answer:
$5,500 USD
Explanation:
Since traditional Roth IRA accounts cannot be owned jointly, then both individuals must have their own account. That being said they can still contribute to each other's Roth IRA accounts on behalf of their spouse. You can contribute a total of 100% of your earned income up to a limit of $5,500 USD. Pensions are not allowed as contributions. Individual's over the age of 50 have a limit of $6,500
A contract pledging title to assets as security for a node or bond is known as (an):
A. Sinking fund.
B. Mortgage.
C. Equity.
D. Lease.
E. Indenture
Answer:
B. Mortgage.
Explanation:
This is simply explained to be a loan that has been taken in retrospect to purchasing of lands or property. This is of different forms, some are said to run for 15 years while some run up till 30 years in some cases too. In many cases, they are sometimes addressed to be "claims on property". Some are seen to be fixed-rated and in this case, borrowers are known to pays the same interest rate for the life of the loan.
In as much as they are forms of rights from incoperation, individuals and businesses use mortgages to make large real estate purchases without paying the entire purchase price up front. Borrower also repays the loan, plus interest, until she or he owns the property free and clear.
In which of the following situations does a focus group have an advantage over a traditional survey? Choose ALL that apply.
1) When gathering granular, personalized information on a few customers
2) When gathering anonymous consumer feedback
3) When gathering a large dataset for quantitative analysis
4) When the question or topic is likely to be misunderstood by respondents
5) When it is important for each consumer's feedback to be independent of other consumers’ feedback
Answer: 1. When gathering granular, personalized information on a few customers.
4) When the question or topic is likely to be misunderstood by respondents.
Explanation:
The situations when a focus group has an advantage over a traditional survey are:
• When gathering granular, personalized information on a few customers and
• When the question or topic is likely to be misunderstood by respondents.
This is because in focus groups, there's a detailed discussion of issues with selected consumers and also, when the topic is misunderstood by the respondents, there's someone who is willing to help.
The market for apple pies in the city of Ectenia is competitive and has the following demand schedule:________.
Price Quantity Demanded
$1 1,200 pies
2 1,100
3 1,000
4 900
5 800
6 700
7 600
8 500
9 400
10 300
11 200
12 100
13 0
Each producer in the market has fixed costs of $9 and the following marginal cost:________.
Quantity Marginal Cost
1 pie $ 2
2 4
3 6
4 8
5 10
6 12
A. Compute each producer’s total cost and average total cost for 1 to 6 pies.
B. Assume the price of a pie is $10. How many pies are sold? How many pies does each producer make? How many producers are there? How much profit does each producer earn?
C. Is the situation described in part (B) a long-run equilibrium? Why or why not?
D. Suppose that in the long run there is free entry and exit. How much profit does each producer earn in the long-run equilibrium? What is the market price? How many pies does each producer make? How many pies are sold in the market? How many pie producers are operating?
Answer:
Explanation:
A.) Answer to question A is attached.
B.) The price of the pie is $10 according to the question. Please note that in a competitive market, a firm produces that level of output at which price equals MC. I.e P = MC. Where there is no such output, then it will produce up to the level in which P>MC.
Therefore, price(P) is equal to MC, P = MC up to the production of 5 pies.
So, producers in the market = 300 ÷ 5
= 60.
Profit = ( 5 × 10 ) - ( 5 × 7.8 )
= 50 - 39
= $11
Therefore, at a price of $10, 300 pies are sold in the market. Each producers makes 5 pies, so there are 60 producers in the market, each making a profit of $11.
C.) In a competitive market, and in the long run, price = minimum ATC.
Here, the minimum ATC is $7, but the price is $10.
The above means that the market is not in the long run equilibrium because price (P) is not equal to the minimum ATC. Thus in the long run, more firms will enter the market until the price equals ATC.
D.) Producers operating = 600 ÷ 2
= 300
It therefore means that in the long run, each producer earns a profit of $0. The market price is $7, while at this price, 600 pies are sold in the market, and each producer makes 2 pies , hence there are 300 producers in operation.
During a period the demand for the goods by the consumers is called quantity demanded. In the market, 300 producers are operating.
What is marginal cost?Marginal cost is the additional cost when the additional unit of the goods or services is added.
The table for the total and the average cost is attached in the image below.
Given, the price of the pie is $10 and the price is equal to the marginal cost of the 5 pies produced. The producers in the market are calculated as:
[tex]\rm Producers = \dfrac{300}{5} = 60[/tex]
Profit is calculated as:
[tex]\begin{aligned} & = ( 5 \times 10 ) - ( 5 \times 7.8 )\\\\&= 50 - 39\\\\&= \$11\end{aligned}[/tex]
In the long-run market, the minimum ATC is $7 but the actual price is $10, hence the market will not be in the long run and more firms and corporations will enter the market till the price equilibrates the ATC.
Pie producers in the market is calculated as:
[tex]\dfrac{600}{2} = 300[/tex]
When the market price is $ 7 then the market sold 600 pies while each producer makes two pies hence 300 producers are operating in the market.
Therefore, producers operating in the market are 300.
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Pecking order hypothesis. Rachel can raise capital from the sources in the popup window: LOADING.... What is Rachel's weighted average cost of capital if she needs to raise a. $10,000? b. $25, 000? c. $35,000?a. What is Rachel's weighted average cost of capital if she needs to raise $10,000?Source of Funds Parents Friends Bank loan Credit cardInterest Rate 0% 5.5% 11.5% 15.5%Borrowing Limit $11,000 $2,000 16,000 $6,000
Answer:
a. 0%
b. 5.96%
c. 8.23%
Explanation:
Ease see solution for Rachel's weighted average cost of capital for each;
a. WACC = 10,000/10,000 * 0.1 = 0%
b. WACC = [11,000/25,000 * 0%] + [2,000/25,000 * 5.5%] + [12,000/25,000 * 11.5%]
= 0%+0.44%+5.52%
= 5.96%
c. WACC =[11,000/35,000 * 0%] + [2,000/35,000 * 5.5%] + [16,000/35,000 * 11.5%] + [6,000/35,000 * 15.5%]
= 0%+0.3140%+5.2571%+2.6571%
= 8.23%
On January 2, 2021, L Co. issued at face value $26,500 of 3% bonds convertible in total into 2,300 shares of L's common stock. No bonds were converted during 2021. Throughout 2021, L had 2,300 shares of common stock outstanding. L's 2021 net income was $8,500. L's income tax rate is 20%. No potential common shares other than the convertible bonds were outstanding during 2021. L's diluted earnings per share for 2021 would be:
Answer:
Diluted earnings per share for 2021 = $1.98
Explanation:
Bond interest expense $883
(26,500 * 3%)
Bond interest expense, net of tax $618
(883*(1-30%) )
Net income for diluted earnings $9,118
($8,500 + $618 )
Actual and Potential common shares 4,600 shares
(2,300 shares + 2,300 shares)
Diluted earnings per share for 2021 = Net income for diluted earnings / Actual and Potential common shares
Diluted earnings per share for 2021 = $9,118 / 4,600
Diluted earnings per share for 2021 = $1.98
"A brokerage research department has been following the common stock of Acme Corporation and has prepared a favorable research report on the company. The brokerage firm is a member of a syndicate handling an issue of Acme common stock that is currently in registration. A registered representative wishes to send the research report to all of his customers. Which statement is TRUE?"
Complete question reads;
"A brokerage research department has been following the common stock of Acme Corporation and has prepared a favorable research report on the company. The brokerage firm is a member of a syndicate handling an issue of Acme common stock that is currently in registration. A registered representative wishes to send the research report to all of his customers. Which statement is TRUE?"
A. The report can be sent only if it has been approved by a supervisory analyst
B. The report can be sent only if it is accompanied or proceeded by, a preliminary prospectus.
C. The report can be sent only if it has been approved by the branch office.
D. The report cannot be sent until registration is effective.
Answer:
D. The report cannot be sent until registration is effective.
Explanation:
Usually, under the guidelines of the Securities Act of 1933, no offer can be made to the customer unless a final registration has been made and effected by means of a prospectus.
Thus, the report cannot be sent until registration is effective..
What process conveys positive and negative job information to the applicant in an unbiased manner?
Answer: Realistic job preview
Explanation:
Realistic job preview is a process conveys positive and negative job information to the applicant in an unbiased manner.
It should be noted that a realistic job preview gives information about what the job entails and the role the candidates will play when they are employed.
Lee is a developer on the team. At every daily stand-up Lee reports, "Yesterday, I worked on indexing. Today, I will work on indexing. I have no impediments". What approach should the Scrum Master suggest to Lee to improve the team's visibility into his work? g
Answer:
He should try brainstorming new things to work on
Explanation:
A Scrum master wants to the entire team to be successful, and so needs to commend and encourage new ideas.
Rather than simply work on indexing, Lee could explore other areas in need of attention. However, the Scrum master plays a vital role in shaping the best talents in the team.
A company borrowed $10,000 by signing a 180-day promissory note at 9%. The total to be paid at maturity of the note is: (Use 360 days a year.) Multiple Choice $10,075 $10,300 $10,450 $10,900 $11,800
Answer:
$10,450
Explanation:
Calculation for the maturity value of the note
The first step
(9%×$10,000×180/360 days)
=$450
Now let find the maturity value of the note
Maturity value of the note=$10,000+$450
Maturity value of the note=$10,450
Therefore maturity value of the note will be $10,450
What is the future value of $12,000 after 5 years if the appropriate interest rate is 6%, compounded semiannually?
Answer:
FV = $16126.99655 rounded off to $16127
Explanation:
To calculate the future value of a sum of money, we simply multiply the present value by (1 + interest rate) for the period of time that we require the amount to be compounded. Thus, the formula for the future value of a sum of amount with annual compounding is,
FV = P * (1+i)^t
Where,
FV is future valuePV is present valuei is the interest ratet is the period of timeFor semi annual compounding, we simply divide the annual i by 2 and multiply the t by 2. So, Future value of an amount with semi annual compounding will be,
FV = P * (1 + i/2)^t*2
FV = 12000 * (1 + 0.06/2)^5*2
FV = 12000 * (1+0.03)^10
FV = $16126.99655 rounded off to $16127
g Vega is defined as Group of answer choices the sensitivity of an option's price to changes in volatility. the change in the value of the underlying asset for a dollar change in the call price. the percentage change in the value of an option for a 1% change in the value of the underlying asset. the change in the volatility of the underlying stock price. the change in the value of an option for a dollar change in the price of the underlying asset.
Answer: the sensitivity of an option's price to changes in volatility.
Explanation:
Vega us defined as the sensitivity of an option's price to changes in volatility. Vega denotes the amount by which the contract's price of an option changes due to the 1% change that occurs in the underlying asset's implied volatility.
Therefore, based on the scenario that has been explained above, the correct answer is the first option above.
Adams Trophies makes and sells trophies it distributes to little league ballplayers. The company normally produces and sells between 10,000 and 16,000 trophies per year. The following cost data apply to various activity levels:
Required Complete the preceding table by filling in the missing amounts for the levels of activity shown in the first row of the table. (Round "Cost per unit" answers to 2 decimal places.)
Number of Trophies 6,000 8,000 10,000 12,000
Total costs incurred
Fixed
Variable
Total costs $ 76,000 42,000 118,000 $ $ 0 $ 0 $ 0
Cost per unit $ 12.67
Fixed Variable
Total cost per trophy 7.00 $ 19.67 $ 0.00 $ 0.00 $ 0.00
Answer:
Number of Trophies 6,000 8,000 10,000 12,000
Total costs incurred
Fixed 76,000. 76,000 76,000 76,000
Variable 42,000 56,000 70,000 84,000
Total costs 118,000 132,000 146,000 160,000
Cost per unit 12.67 9.50 7.60 6.33
Fixed Variable 7.00 7.00 7.00 7.00
Total cost per trophy 19.67 16.50 14.60 13.33
Explanation:
Calculation to Complete the preceding table by filling in the missing amounts for the levels of activity shown in the first row of the table
Number of Trophies 6,000 8,000 10,000 12,000
Total costs incurred
Fixed 76,000 76,000 76,000 76,000
Variable 42,000 56,000 70,000 84,000
Total costs 118,000 132,000 146,000 160,000
Cost per unit 12.67 9.50 7.60 6.33
Fixed Variable 7.00 7.00 7.00 7.00
Total cost per trophy 19.67 16.50 14.60 13.33
Fixed Cost =76,000
Variable cost per unit =42,000/6,000 units=7 per units
Variable cost per unit =8,000 units×$7 =$56,000
Variable cost per unit=10,000 units×$7=$70,000
Variable cost per unit=12,000 units× $7=$84,000
Total Cost =Fixed cost + Variable cost
Cost per unit=Fixed cost/Number of units
8,000 units=76,000/8,000=$9.50
10,000 units=76,000/10,000=$7.60
12,000 units=76,000/12,000=$6.33
Fixed Variable=42,000/6,000 units=7 per units
Total cost per trophy =Cost per units + Fixed variable
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 the 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.
Answer:
Option B
Explanation:
Both Nadia and Samantha have insured their cars and willing to pay $100 over the expected loss for insurance. If the car is stolen the company would pay expected loss and would earn nothing and if the car is not stolen the company would not be liable for any loss and would earn $200, Therefore the company would earn between $0 and $200.