Answer:
$0
Explanation:
As we know that the impairment loss is recognized when the book value is more than the fair value
As we can see that since book value is not greater than the fair value so the impairment loss than need to be recorded at the end of 2016 should be zero as it does not satisfy the given condition
Hence, the answer is $0 and the same is to be considered
Firm X is considering a project and its analysts have projected the following outcomes and their probabilities. 30% chance of Net Income being $4,600; 45% chance of Net Income being $7,800 and 25% chance of Net Income being $13,500. What is the expected value of the outcomes?
Answer:
$8,265
Explanation:
S/n Probability Net Income Expected Income
1 30% $4,600 $1,380
2 45% $7,800 $3,510
3 25% $13,500 $3,375
Total 100% $8,265
Note
Expected Income = Probability * Net income
Probability is termed as the branch of mathematics that is concerned with the numerical calculations or the descriptions with a chance for the event to occur. The probability of any of the events carries the number from 0 to 1.
The expected value of outcomes is $8,265
Serial no. Probability Net Income Expected Income
1 30% $4,600 $1,380
2 45% $7,800 $3,510
3 25% $13,500 $3,375
Total 100% $8,265
The formula to calculate the expected value of the outcomes is:
[tex]\begin{aligned}\text{Expected Income} = \text{Probability} \times\text{ Net income}\end{aligned}[/tex]To know more about the probability and the expected value of the outcomes, refer to the link below:
https://brainly.com/question/14262217
In December Year 4, Mill Co. began including one coupon in each package of candy that it sells and offering a toy in exchange for $.30 and one coupon. The toys cost Mill $.80 each. Eventually, 70% of the coupons will be redeemed. During December, Mill sold 100,000 packages of candy and 15,000 coupons were redeemed. In its Year 4 income statement, what amount should Mill report as Premium Expense?
Answer:
$35,000
Explanation:
Sine Mill expects that 70% of the coupons will be redeemed, their premium expense should equal 70% x 100,000 packages x ($0.80 - $0.30) = $35,000
the journal entry to record the issuing of the discount coupons should be:
Dr Premium (or toy coupons, or marketing) expense 35,000
Cr Toy coupons liability 35,000
Since 15,000 were redeemed in December, the adjusting entry should be:
December 31, year 4
Dr Toy coupons liability 7,500
Cr Toys inventory 7,500
The process of creating value for building relationships with customers in order to
capture value back from them is .
a. Utility c. Transactional e. Buying power
b. Social Commerce d. Marketin
Explanation:
The answer is marketing
Your great aunt left you an inheritance in the form of a trust. The trust agreement states that you are to receive $2,400 on the first day of each year, starting immediately and continuing for 20 years. What is the value of this inheritance today if the applicable discount rate is 6.75 percent
Answer:
The value of this inheritance today is $30,541.12.
Explanation:
Since the $2,400 is to be received the first day of each year, this is shows that this an annuity due and the relevant formula to use is the formula for calculating the present value (PV) of an annuity due given as follows:
PV = P * [{1 - [1 / (1 + r)]^n} / r] * (1 + r) .................................. (1)
Where ;
PV = Present value or the value of this inheritance today =?
P = Annual receipt = $2,400
r = discount rate = 6.75%, or 0.0675
n = number of years = 20
Substituting the values into equation (1) above, we have:
PV = $2,400 * [{1 - [1 / (1 + 0.0675)]^25} / 0.0675] * (1 + 0.0675)
PV = $2,400 * 11.9208107635642 * 1.0675
PV = $30,541.12
Therefore, the value of this inheritance today is $30,541.12.
Problem 16-4 Break-Even EBIT [LO1] Round Hammer is comparing two different capital structures: An all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 195,000 shares of stock outstanding. Under Plan II, there would be 145,000 shares of stock outstanding and $2.9 million in debt outstanding. The interest rate on the debt is 7 percent, and there are no taxes. a. If EBIT is $475,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. If EBIT is $725,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. What is the break-even EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
Answer:
a)
under plan I:
EBIT = $475,000
net income = $475,000
EPS = $475,000 / 195,000 stocks = $2.44
under plan II:
EBIT = $475,000
net income = $475,000 - ($2,900,000 x 7%) = $272,000
EPS = $272,000 / 145,000 stocks = $1.88
b)
under plan I:
EBIT = $725,000
net income = $725,000
EPS = $725,000 / 195,000 stocks = $3.72
under plan II:
EBIT = $725,000
net income = $725,000 - ($2,900,000 x 7%) = $522,000
EPS = $522,000 / 145,000 stocks = $3.60
c)
in thousands
EBIT / 195 = (EBIT - $203) / 145
145EBIT = 195EBIT - $39,585
50EBIT = $39,585
EBIT = $39,585 / 50 = $791.7 x 1,000 = $791,700
Brianne, vice president of finance, and Dominic, vice president of human resources, are:________.
a. lower-level managers.
b. team leaders.
c. advisory managers.
d. board members.
e. functional managers.
Answer:
e. functional managers.
Explanation:
Functional managers may be defined as every individual who has the major responsibility of their expertise or a particular department, which is to be referred to the high authority of that specific department.
Therefore according to the above explanation, the correct answer is e and the rest is to be not relevant according to the given situation.
On January 1, 2017, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these two companies for the years of 2017 and 2018 follows:
2017 2018
Abbey Company:
S ales $ (742,000 ) $ (994,000 )
Operating expenses 512,000 564,000
Intra-entity gross profits in ending
inventory (included in above figures) (185,000 ) (232,000 )
Dividend income—Benjamin Company (22,500 ) (27,000 )
Benjamin Company:
Sales (237,000 ) (279,000 )
Operating expenses 128,000 162,000
Dividends paid (25,000 ) (30,000 )
Assume that a tax rate of 40 percent is applicable to both companies.
a. On consolidated financial statements for 2018, what are the income tax expense and the income tax currently payable if Abbey and Benjamin file a consolidated tax return as an affiliated group?
b. On consolidated financial statements for 2018, what are the income tax expense and income tax currently payable if they choose to file separate returns?
Answer:
Abbey and Benjamin's 90% shares
a. Income tax expense for 2018 = $214,120
Income tax payable = $214,120
b. Income tax expense for 2018:
Abbey Benjamin
Income Tax Expense (40%) $172,000 $46,800
Income tax payable $172,000 $46,800
Explanation:
a) Data and Calculations:
1. Abbey Company:
2017 2018
Sales $ (742,000) $ (994,000)
Operating expenses 512,000 564,000
Intra-entity gross profits in ending 230,000 430,000
inventory (included in above figures) (185,000 ) (232,000 )
Dividend income—Benjamin Company (22,500 ) (27,000 )
2. Benjamin Company:
2017 2018
Sales (237,000 ) (279,000 )
Operating expenses 128,000 162,000
Dividends paid (25,000 ) (30,000 )
3. Consolidated Statements
Abbey Benjamin Consolidated
Sales $ (994,000) $ (279,000 ) $ 1,245,100
Operating expenses 564,000 162,000 709,800
Intra-entity gross profits in ending 430,000 117,000 535,300
Income Tax Expense (40%) 172,000 46,800 214,120
Cost classifications For each of the following costs, check the columns that most likely apply (both variable and fixed might apply for some costs). Product Costs Direct Indirect Period Variable Fixed Wages of assembly-line workers Glue and thread Outbound shipping costs Raw materials handling costs Salary of public relations manager Production run setup costs Plant utilities Electricity cost of retail stores Research and development expense Product costing-manufacturing overhead Nautical Accessories, Inc.,, manu- Lo 5 factures women's boating hats. Manufacturing overhead is assigned to production on a machine-hour basis. For 2016, it was estimated that manufacturing overhead would total $359,520 and that 21,400 machine hours would be used. Required: A. Calculate the predetermined overhead application rate that will be used for absorption costing purposes during 2016. B. During April, 3,900 hats were made. Raw materials costing $6,240 were used, and direct labor costs totaled $9,165. A total of 780 machine hours were worke during the month of April. Calculate the cost per hat made during April. C. At the end of April, 1,050 hats were in ending inventory. Calculate the cost of the ending inventory and the cost of the hats sold during April.
Answer:
A. Particular Direct Indirect Variable Fixed
1 Wages of Assembly Yes No Yes No
2 Deprecation of plant & No Yes No Yes
Machinery
3 Glue & Thread No No Yes No
4 Outbound Shipping Cost No Yes No Yes
5 Raw Material Handling Cost Yes No Yes No
6 Salary Of Public Relations No Yes No Yes
manager
7 Production Run Setup Costs Yes No Yes No
8 Plant Utilities Yes No Yes No
9 Electricity cost of retail stores No Yes Yes No
10 Research and development No Yes No Yes
expense
B. Product-Costing
i. Manufacturing Cost Per Machine Hour = Total Manufacturing overhead / Total Machine Hours
Manufacturing Cost Per Machine Hour = 359,520.00 / 21,400.00
Manufacturing Cost Per Machine Hour = 16.80
ii. Particular Amount
Raw Material $6,240
Direct Labor Cost $9,165
$15,405
Manufacturing overhead $13,104
(780 hours* $16.80)
Total Cost of 3900 Hats $28509
Thus, the Cost of One hat = $28509 / 3900 hat = $7.31 per hat
iii. Total Hats made During the Month Of April 3,900
Less: Closing Inventory 1,050
Sold During the month of April 2,850
Cost Of Hats Sold During the month of April
= 2,850 * $7.31
= $20,833.5
Cost of Closing Stock (1,050 hat) = 1,050 hat * $7.31 = 7675.5
Your monthly statement from your bank credit card shows that the monthly rate of interest is 1.5%. What is the annual effective rate of interest you are being charged on your credit card
Answer:
the effective annual rate of interest is 19.56%
Explanation:
The computation of the annual effective rate of interest is shown below:
Since the monthly rate of interest is 1.5%
So,
Annual interest is
= 1.5 % × 12 months
= 18 %
Now
Effective annual rate of interest is
= ( 1 + 0.18 ÷ 12)^12 - 1
= 0.1956
= 19.56 %
hence, the effective annual rate of interest is 19.56%
Answer:
i believe your annual rate of interest is 19.56%
Explanation:
I just answered that question
"A retail store owner offers a discount on product A and predicts that the customers would purchase products B and C in addition to product A. Identify the technique used to make such a prediction"
Answer:
Data mining
Explanation:
Here are the options to this question :
a. Data query b. Simulation c. Data mining d. Data dashboards
Data mining is used to extract useful data from a larger set of any raw data. It is used to find relationship among data.
The store owner found a relationship between A, B and C.
The employees of Xitrex, Inc., are paid each Friday. The company’s fiscal year-end is June 30, which falls on a Wednesday for the current year. Salaries are earned evenly throughout the five-day work week, and $10,000 will be paid on Friday, July 2.
Required:
1. Prepare an adjusting entry to record the accrued salaries as of June 30, a reversing entry on July 1, and an entry to record the payment of salaries on July 2.
2. Prepare journal entries to record the accrued salaries as of June 30 and the payment of salaries on July 2 assuming a reversing entry is not recorded.
Answer:
1. Prepare an adjusting entry to record the accrued salaries as of June 30, a reversing entry on July 1, and an entry to record the payment of salaries on July 2.
June 30, 202x, accrued wages expense
Dr Wages expense 6,000
Cr Wages payable 6,000
July 1, 202x, reversing entry of accrued wages
Dr Wages payable 6,000
Cr Wages expense 6,000
July 2, 202x, wages expense
Dr Wages expense 10,000
Cr Cash 10,000
2. Prepare journal entries to record the accrued salaries as of June 30 and the payment of salaries on July 2 assuming a reversing entry is not recorded.
June 30, 202x, accrued wages expense
Dr Wages expense 6,000
Cr Wages payable 6,000
July 2, 202x, payment of wages
Dr Wages expense 4,000
Dr Wages payable 6,000
Cr Cash 10,000
International Business, Inc. (IBI), agrees to assume a debt of Southern Export Company to First National Bank. This promise is for the benefit of IBI. To be enforceable, the promise must be in writing if the debt is for Group of answer choices
Complete Question:
International Business, Inc. (IBI), agrees to assume a debt of Southern Export Company to First National Bank. This promise is for the benefit of IBI. To be enforceable, the promise must be in writing if the debt is for O $5,000.none of the above. $50. $500.
Answer:
none of the above.
Explanation:
The choices do not provide any clue for further explanation. However, one can identify that the promise to assume a debt is a contract. For most business contracts to be enforceable, there is the need for the promise to be in writing. This provides a documented evidence which can be tendered in the court of law. It is a known adage that a short pen is greater than a long memory. So, exchange of promises or consideration is better done in writing form than orally.
Which of the following statements is CORRECT?
A) When firms are deciding on the size of stock splits--say whether to declare a 2-for-1 split or a 3-for-1 split, it is best to declare the smaller one, in this case the 2-for-1 split, because then the after-split price will be higher than if the 3-for-1 split had been used.
B) Back before the SEC was created in the 1930s, companies would declare reverse splits in order to boost their stock prices. However, this was determined to be a deceptive practice, and reverse splits are illegal today.
C) Stock splits create more administrative problems for investors than stock dividends, especially determining the tax basis of their shares when they decide to sell them, so today stock dividends are used far more often than stock splits.
D) When a company declares a stock split, the price of the stock typically declines--for example, by about 50% after a 2-for-1 split--and this necessarily reduces the total market value of the firm's equity.
E) If a firm's stock price is quite high relative to most stocks--say $500 per share--then it can declare a stock split of say 20-for-1 so as to bring the price down to something close to $25. Moreover, if the price is relatively low--say $2 per share--then it can declare a "reverse split" of say 1-for-10 so as to bring the price up to somewhere around $20 per share.
Answer: E) If a firm's stock price is quite high relative to most stocks--say $500 per share--then it can declare a stock split of say 20-for-1 so as to bring the price down to something close to $25. Moreover, if the price is relatively low--say $2 per share--then it can declare a "reverse split" of say 1-for-10 so as to bring the price up to somewhere around $20 per share.
Explanation:
Stock Splits usually occur when a company believes that its stock price is relatively high compared to most other stocks.
If the stock is $500 per share, a stock split of 20-1 would divide the stock so that it comes to;
=500/20
= $25 per share.
If the company believes that prices are too low, they can do a reverse split or a stock merge to bring the price up by merging stocks together. If Stock is trading at $2 per share, a 1 - 10 would take it up to;
= 2 * 10
= $20 per share.
A firm is producing 20 units with an average total cost of $25 and marginal cost of $15. If it were to increase production to 21 units, which of the following must occur?
a. Marginal cost would decrease.
b. Marginal cost would increase.
c. Average total cost would decrease.
d. Average total cost would increase.
Answer:
c. Average total cost would decrease.
Explanation:
At the time of more units produced by a firm for a valid reason like efficient labor, good quality tools of production etc so in this the average fixed cost is inbuilt also it is allocated to the large number of output units plus the variable cost is also decline
Therefore the average total will always decline as the level of production increased because the average total cost involves both the cost i.e. average fixed cost and the average variable cost
Hence, option C is correct
Floyd and Gert enter into a contract by which Floyd promises to deliver fertilizer to Gert. Floyd subsequently transfers this duty to Hazel. Floyd is
Answer: an obligor
Explanation:
From the question, we are informed that Floyd and Gert enter into a contract by which Floyd promises to deliver fertilizer to Gert and that Floyd subsequently transfers this duty to Hazel.
In this case, Floyd is an obligor. An obligor os defined as an individual who by contract or due to a legal procedure, undertakes an obligation for another individual.
The correlation coefficient between a selection test and job performance is 0. This means the selection test_________ .
(a) perfectly predicts job performance
(b) and job performance are unrelated
(c) has adverse impact on job performance
(d) is positively related to job performance
Answer:
(b) and job performance are unrelated
Explanation:
Correlation coefficient = 1 perfectly related
Correlation coefficient = 0 perfectly unrelated
Correlation coefficient of zero means the selection test and the job performance are unrelated. Hence, the correct answer is B
West Corp. issued 14-year bonds 2 years ago at a coupon rate of 9.8 percent. The bonds make semiannual payments. If these bonds currently sell for 103 percent of par value, what is the YTM?
Answer:
The answer is 9.38%
Explanation:
This is a semiannual paying coupon. And it means West Corp pays interest twice a year.
N(Number of periods) = 24 periods ( [14years - 2 years ago] x 2)
I/Y(Yield to maturity) = ?
PV(present value or market price) = $1,030 ( 103% x $1,000)
PMT( coupon payment) = $49 ( [9.8 percent÷ 2] x $1,000)
FV( Future value or par value) = $1,000.
We are using a Financial calculator for this.
N= 24; PV = 1.030; PMT = 49; FV= $1,000; CPT I/Y= 4.69
Therefore, the Yield-to-maturity of the bond for annual is 9.38% (4.69% x 2)
The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service.
Projected sales $18 million
Operating costs (not including depreciation $ 9 million
Depreciation $ 4 million
Interest expense $ 3 million
The company faces a 40% tax rate. What is the project's operating cash flow for the first year (t=1)?
Answer:
$7,000,000
Explanation:
The project"s operating cash flow is calculated below
Sales. $18,000,000
Less: operating cost. ($9,000,000)
Less: depreciation. ($4,000,000)
Operating income taxes $5,000,000
Less: Tax at 40% on EBIT ($2,000,000)
Operating income after taxes
$3,000,000
Add back depreciation. $4,000,000
Operating cash flow $7,000,000
Personal pronouns can be written in___ cases. A. five B. three C. two D. four
Answer:
B) three cases
Explanation:
Personal pronouns can be written in three cases
Answer:
The English language has just three cases
Explanation:
Answer: B
If you were an advisor at a global summit on alternative energy, which source of energy would you recommend countries invest more money in
Answer:
If I were an advisor at the alternative energy summit I would support investing in solar energy.
Explanation:
The reasons are various:
- The cost of implementation is much cheaper than that of wind turbines or hydrogenerators, which is why it is more economically profitable.
- It can be implemented in any area of the world or in any place where you find sunlight (such as areas of the Middle East), regardless of the hours of daily sunlight (The sun is an inexhaustible source of energy).
- It is a clean energy, since it produces energy without expense or damage to nature.
- In addition to this, the useful life of photovoltaic panels is 20 years, a fairly long time with respect to the amount of energy generated.
Answer:
If I was an advisor, I would choose to support Solar energy. The cost of implementing such a thing is cheaper than the cost of implementing wind turbines or hydrogenerators. With a lower cost, it makes it more economically profitable. It can be installed in any place where you can find sunlight. These can be used regardless of how many hours of sunlight you have daily.
It is a clean energy source due to the fact that it produces energy without expense or damage to nature. The usual lifespan of photovoltaic panels is 20 years. Which is a fairly long time considering how much energy can be generated from the panels.
Why choose solar energy? Solar energy is one of the most abundant sources of energy due to the fact that it relies on the sun in order to produce energy. Solar energy is cheaper than most fossil fuels, the cheapest option for fossil fuels is natural gas which costs between 4.2 and 7.8 cents per kWh while solar energy costs 4.3 cents per kWh. It is also quicker to install the solar panels than it is to set up any of the other sources of energy. Considering that it is also a clean source of renewable energy that certainly helps the cause and lowers the effects of global warming.
Explanation:
Distinguish between the costs of having a basic checking account and an interest-bearing checking account
Answer:
Checking account is what you can use, and ibca is account that has interest rate.
Explanation:
According to the Crash Course video on the Industrial Economy, in which of the following ways did the US Civil War spur rapid industrialization of the country?
A. Forced introduction of a national currency.
B. Provided federal contracts to arms and clothing manufacturers.
C. Improved infrastructure particularly in the form of the transcontinental railroad and telegraph systems.
D. Led to the invention of the Bessemer process of steel production.
E. Introduced flight.
Answer:
A. Forced introduction of a national currency.
B. Provided federal contracts to arms and clothing manufacturers.
C. Improved infrastructure particularly in the form of the transcontinental railroad and telegraph systems.
Explanation:
The Civil War was a war between the then Northern States who comprised the Union and the then Southern States who comprised ti Confederacy in an attempt to get the Confederacy to rejoin the United States of America.
The war had many casualties but some good was done to the economy in terms of the following;
There was a forced introduction of a national currency known as the Greenbacks after Congress passed the Legal Tender Act of 1862.The Federal Government increased spending in the economy by providing federal contracts to arms and clothing manufacturers to aid the troops.Improved infrastructure to enable information get to soldiers faster as well as to move soldiers faster especially in the areas of telegraph development and the construction of the transcontinental railroad."The primary criteria for a person to be appointed to a securities industry arbitration panel is that the person be:"
Answer:
Disinterested
Explanation:
Arbitration panel is a group of adjudicators that meet to resolve disputes between parties.
The panel can be made up of one person or a group of two or more people.
Adjudicators are usually experts in a particular field related to the issue under dispute.
The analyse the situation and present recommendation to the parties in the dispute.
The primary criteria for being a part of an arbitration panel is that one has to be disinterested.
They must not have any connection to the parties involved in the dispute.
The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below: Sales $ 830,000 Variable expenses $ 390,000 Fixed manufacturing expenses $ 266,000 Fixed selling and administrative expenses $ 232,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $111,000 of the fixed manufacturing expenses and $103,000 of the fixed selling and administrative expenses are avoidable if product D74F is discontinued. What would be the financial advantage (disadvantage) from dropping product D74F?
Answer:
the financial disadvantage of dropping D74F = $226,000. This means that if the company drops D74F, its operating income will decrease by $226,000.
Explanation:
income from product D74F = $830,000 - $390,000 - $266,000 - $232,000 = -$58,000
unavoidable costs = ($266,000 - $111,000) + ($232,000 - $103,000) = $284,000
the financial disadvantage of dropping D74F = total unavoidable costs - net loss = $284,00 - $58,000 = $226,000.
If the old machine is replaced, it can be sold for $32800. Which of the following amounts is a sunk cost? $246000 $820000 $287000 $328000
Answer: $287,000
Explanation:
Sunk costs are costs that have already been incurred and so should make no impact on the decision to be made. In the case of fixed assets to be replaced, the Sunk cost would be the Book value of the Asset.
Sunk Cost of Old Machine = Book Value of old machine
Sunk Cost of Old Machine = Cost Price - Accumulated Depreciation
Sunk Cost of Old Machine = 410,000 - 123,000
Sunk Cost of Old Machine = $287,000
Consider the following spreadsheet. The objective is to minimize the total cost of assigning jobs to machines. A job can be assigned to only one machine and a machine can be assigned only one job. All jobs must be assigned. Cells B3:F7 contain the assignment costs of jobs to machines. Cells B12:F16 contain the decision variables. a) What formula should be placed in cell I3
Available Options Are:
A. =SUM(G12:G16).
B. =SUMPRODUCT(B3:F7, B12:F16)
C. SUMPRODUCT(B3:F7, B12:F16).
D. =SUM(B12:F16)
Answer:
Option B. =SUMPRODUCT(B3:F7, B12:F16)
Explanation:
Here we need summation of two rows B3:F7 and B12:F16. The formula that we will use will be SUMPRODUCT. To calculate sum product in I3 we will edit equal sign first and then "SUMPRODUCT(,)". Then complete the rows that we want to add. Before the coma sign we will place the first row which is B3:F7 and after the coma sign we will place the second row which is B12:F16. In this way we would compute the summation of values present in both rows.
This means that only Option B is correct here.
Option A is not correct because it is the summation of cells present in a single column which doesn't include any cost item assigned. Hence it is incorrect as the formula must be the summation of 2 rows.
Option C is incorrect because it doesn't includes equal sign at the start.
Option D is incorrect because it is only the sum of a single row B12:F16, hence it is incorrect.
Hudson Corporation will pay a dividend of $5.00 per share next year. The company pledges to increase its dividend by 7.80 percent per year indefinitely.
If you require a return of 5.40 percent on your investment, how much will you pay for the company's stock today?
a. $150.86
b. $157.14
c. $163.43
d. $152.12
e. $36.72
Answer:
$157.14
Explanation:
Calculation for how much will you pay for the company's stock today
Using this formula
P0 = D1 / (Ke - g)
Where,
P0 = Price of Share
D1 = Current Dividend=$3.30
Ke = Cost of Equity=5.40%
g = growth rate=3.30%
Let plug in the formula
P0 = $3.30/ (5.40%-3.30%)
P0 = $3.30/0.021
P0= $157.14
Therefore the amount that you will pay for the company's stock today will be $157.14
Why does only systematic risk exposure matter for the risk premium, i.e., how does the price adjust to make only systematic risk affect the expected risk premium
Answer:
Because it can be mitigated through hedging or by using the correct asset allotment technique, unlike unsystematic risk that can be diversified away.
Explanation:
Systematic risk is a term in finance and economics that describes the available risk to the whole market or portion of the market.
Also, given that, systematic risk is sometimes referred to as “undiversifiable risk,” which concerns the all-around market, and it is considered to be unpredictable and impossible to completely avert.
Hence, only systematic risk exposure matter for the risk premium because it can be mitigated through hedging or by using the correct asset allotment technique, unlike unsystematic risk that can be diversified away.
If the CPI is 230 in year 1 and 249 in year 2, what is the approximate percentage change in prices between the two years
Answer: 8.3%
Explanation:
From the question, we are informed that the consumer price index is 230 in year 1 and 249 in year 2. The approximate percentage change in prices between the two years goes thus:
= (New CPI - Old CPI)/Old CPI × 100
=(249 - 230)/230 × 100
= 19/230 × 100
= 0.083 × 100
= 8.3%
Subway is targeting a more narrow market segment among college students than the segment on which McDonald’s focuses. Subway is focusing on students interested in healthy fast food. To select this business strategy, Subway would have used information from all the following categories EXCEPT:________.
a. demographic factors.
b. psychological factors.
c. consumption-pattern factors.
d. end-use segments.
Answer:
d. end-use segments.
Explanation:
Since in the question it is mentioned that Subway is targetting more markets especially for college students instead of focusing on what McDonald focused on. Their motive is to provide healthy fast food
So here they focused on the consumption patterns, demographic factors, and the psychological factors but not in end-use segments
So the same is to be considered
Hence, the correct option is d. end-use segments