Answer:
A. A multi-country strategy is generally superior to a global strategy.
Explanation:
Foreign countries are the countries that are established in a foreign. Each and every foreign country has different consumer preference, buying power, taste and preferences.
Also there are no fixed exchanged rates plus the designs of the product are not fixed for another country as it depends on the customer demand which type of product they needed. Moreover, the growth rate is also different in different countries
Hence, option A is correct
1. Discuss how core factors, cues to quality, and interpersonal factors of a product influence your buying decisions. Discuss with supporting examples.
Explanation:
Interpersonal product feature play a role in determining one's buying decision. For example, an individual who is open to new experiences may be more likely to try a new technology.
Another example is that of an individual who has a negative view of how he or she looks or dresses, he or she may tend to seek and buy products that could enhance how they feel about themselves.
As regards the quality of a product, it is usually based on the purchase plan period. For example, an individual who notices he needs an item urgently may be less likely to include quality in his buying decision, especially when it's a life-saving item for an emergency. But someone who has the time and has been planning to buy an item for months, will more likely examine quality before he makes a buying decision.
(Table) If Jake and Sue are the only buyers of the local pizzeria's pizza, what is the market demand for pizzas at each of the prices listed, starting at the market price of $5? QJ is the quantity demanded at each price by Jake, and QS is the quantity demanded at each price by Sue.
Answer:
This is the table that the question is referring to:
Price QJ QS
5 4 2
10 3 1
15 2 0
20 1 0
Total market demand is the sum of the individual market demands. In this market, it is the sum of the market demand of Jake and Sue.
Market demand at the price of $5 is 7 pizzas.
Market demand at the price of $10 is 4 pizzas.
Market demand at the price of $15 is 2 pizzas.
Market demand at the price of $20 is 1 pizza.
A firm is currently producing 3,000 units of output daily by employing 20 units of labor at a price of $100 per unit and 40 units of capital at a price of $40 per unit. The marginal product of the last unit of labor employed is 50, and the marginal product of the last unit of capital employed is 30. In order to minimize its production costs, the firm should do which of the following?
a. Employ more labor and less capital because the marginal product of labor is greater than the marginal product of capital.
b. Employ less labor and more capital because the firm is currently spending $2,000 on labor and only $1,600 on capital.
c. Employ more labor and less capital because the firm already employs 40 units of capital and only 20 units of labor.
d. Employ less labor and more capital because the marginal product per dollar spent on labor is less than the marginal product per dollar spent on capital.
e. Employ less labor and more capital because a unit of labor costs $100 while a unit of capital costs only $40.
Answer:
e. Employ less labor and more capital because a unit of labor costs $100 while a unit of capital costs only $40.
Explanation:
By employing less labor and more capital, the firm can produce the 3,000 units of daily output at lower production costs since 40 units of capital cost $40 per unit, than it can with 20 units of labor priced $100 per unit. Capital can, therefore, minimize the total production costs, as less labor is used. Capital resources are often in the form of equipment and technological advancement that make work easier, faster, and more efficient with the highest quality possible.
Based on the marginal products of labor and capital, the company should d. Employ less labor and more capital because the marginal product per dollar spent on labor is less than the marginal product per dollar spent on capital.
The company should invest more in the method of production that gives it more marginal product per unit.
Marginal product per unit of labor:
= Marginal product of labor / cost of labor
= 50 / 100
= 0.5 per unit
Marginal product per unit of capital:
= 30 / 40
= 0.75 per unit
Capital has more marginal product per unit and so should be invested in more than labor.
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Lead time for one of your fastest-moving products is 24 days. Demand during this period averages 110 units per day. a) What would be an appropriate reorder point? nothing units (enter your response as a whole number). b) How does your answer change if demand during lead time doubles? nothing units (enter your response as a whole number). c) How does your answer change if demand during lead time drops in half? nothing units (enter your response as a whole number).
Answer:
a.) reorder point = 2,640 units
b.) reorder point = 5,280 units (reorder point doubles)
c.) reorder point = 1,320 units (reorder point drops in half)
Explanation:
Reorder point is the inventory level (point) at which action is taken (order placed) to replenish the stocked item. It is calculated as follows:
Reorder point = (Lead time × average daily sales) + safety stock
Lead time = 24 days
average daily sales = 110 units
safety stock = 0 (not given)
a.) reorder point = (Lead time × average daily sales) + safety stock
reorder point = (24 × 110) + 0 = 2,640 units
b.) if demand during lead time doubles:
lead time = 24 days
average daily sales = (110 × 2) = 220
∴ reorder point = 220 × 24 = 5,280 units
Therefore the reorder point doubles
c.) if demand during lead time drops in half:
lead time = 24 days
average daily demand = (110 ÷ 2) = 55 units
∴ reorder point = 24 × 55 = 1,320 units
Therefore the reorder point drops in half.
A government bond with a coupon rate of 5% makes semiannual coupon payments on January 12 and July 12 of each year. The Wall Street Journal reports the asked price for the bond on January 27 at $1,004.375. What is the invoice price of the bond? The coupon period has 182 days.
Answer:
invoice price (dirty price) = $1,006.435
Explanation:
semi-annual coupon = $1,000 x 5% x 1/2 = $25
clean price = $1,004.375
accrued interest = (Jan. 27 - Jan. 12) x $25 x 1/182 = $2.06
invoice price (dirty price) = clean price + accrued interest = $1,004.375 + $2.06 = $1,006.435
the dirty price or invoice price of a bond includes any accrued interest that the bond may have earned in the period between the last coupon payment and the transaction date.
Crazy Delicious Inc. produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The standard costs for a batch of chocolate (5,000 bars) are as follows: Ingredient Quantity Price Cocoa 500 lbs. $1.40 per lb. Sugar 100 lbs. $0.50 per lb. Milk 250 gal. $1.60 per gal.Required:Determine the standard direct materials cost per bar of chocolate.
Answer:
Unitary cost= $0.23 per unit
Explanation:
Giving the following information:
Standard costs (5,000 bars):
Cocoa 500 lbs. $1.40 per lb.
Sugar 100 lbs. $0.50 per lb.
Milk 250 gal. $1.60 per gal.
First, we need to calculate the total cost:
Total cost= 500*1.4 + 100*0.5 + 250*1.6
Total cost= $1,150
Now, the unitary cost:
Unitary cost= 1,150/5,000
Unitary cost= $0.23 per unit
The standard direct materials cost per bar of chocolate is $0.23 per bar.
First step is to calculate the total direct material cost for production of 5,000 bar of chocolate
Ingredient Quantity Price Cost
Cocoa 500× $1.40 =$700
Sugar 100 ×$0.50 =$50
Milk 250 ×$1.60 =$400
Total $1,150
Second step is to calculate the standard material cost per bar of chocolate
Standard material cost per=$1,150/5,000
Standard material cost per=$0.23 per bar
Inconclusion the standard direct materials cost per bar of chocolate is $0.23 per bar.
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The Sprint vs. Verizon ads that compare the features and pricing of the two networks are examples of competitive advertising. True False
Answer:
True
Explanation:
They are trying to win over customers by comparing each others features in a competition
Competitive advertising is demonstrated by the Sprint vs. Verizon adverts, which compare the functionality and pricing of the two networks. So, it is a true statement.
What is competitive advertising?Competitive advertising is the act of showcasing or promoting one's product in comparison to the product of another company.
This form of marketing can be used to target customers who are devoted to the other brand, prompting them to reassess their purchasing patterns.
The three types of competitive advertising are:
ComparativeReminderReinforcementFor more information about competitive advertising, refer below
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Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.75 million at the end of the first year, and these savings will grow at a rate of 2 percent per year indefinitely. The firm has a target debt-equity ratio of .8, a cost of equity of 11.5 percent, and an aftertax cost of debt of 4.3 percent. The cost-saving proposal is somewhat riskier than the usual projects the firm undertakes; management uses the subjective approach and applies an adjustment factor of +3 percent to the cost of capital for such risky projects. What is the maximum initial cost the company would be willing to pay for the project?
Answer:
$18,191,268.19
Explanation:
the company's WACC = (weight of equity x Re) + (weight of debt x after tax cost of debt) = (0.6 x 11.5%) + (0.4 x 4.3%) = 6.9% + 1.72% = 8.62%
discount rate adjustment factor = 8.62% + 3% = 11.62%
to determine the value of the project:
$1,750,000 / (11.62% - 2%) = $1,750,000 / 9.62% = $18,191,268.19
If the initial outlay is $18,191,268.19, then the project's NPV = $0. This is the maximum amount that the firm should be willing to invest in this project.
HighLife Corporation has the following information: Average demand = 30 units per day Average lead time = 40 days Item unit cost = $45 for orders of less than 400 units Item unit cost = $40 for orders of 400 units or more Ordering cost = $50 Inventory carrying cost = 15 percent The business year is 300 days. Standard deviation of demand during lead time = 90 Desired service level = 95 percent What is the EOQ if HighLife pays $45/unit? Due to possible differences in rounding, choose the closest answer.\
Answer:
365.15 units
Explanation:
The computation of the economic order quantity is shown below:
[tex]= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
where,
Annual demand is
= 30 units × 300 days
= 90,000 units
ordering cost is $50
Carrying cost is
= $45 × 15%
= $6.75
Now placing these values to the above formula
So, the economic order quantity is
[tex]= \sqrt{\frac{2\times \text{90,000}\times \text{\$50}}{\text{\$6.75}}}[/tex]
= 365.15 units
We simply applied the above formula so that the EOQ could come
the fair value of Blossom is estimated to be $820,800. The carrying value of Blossom’s net identifiable assets, including the goodwill, at year-end is $855,000. Prepare Cullumber’s journal entry, if necessary, to record impairment of goodwill.
Answer:
Cullumber Company
Journal Entry:
Debit Loss on Goodwill Impairment $34,200
Credit Goodwill $34,200
To record the loss on goodwill impairment.
Explanation:
a) Data and Calculation:
Fair value = $820,800
Carrying value of net identifiable assets, including goodwill = $855,000
Goodwill impairment = $34,200 ($855,000 - $820,800)
b) Cullumber, which acquired Blossom is expected to check for the impairment of goodwill yearly. The impairment occurs when the carrying value of the net identifiable assets of Blossom is more than the fair value of Blossom. Generally Accepted Accounting Standards require the annual review of the fair value of goodwill to check for its impairment. By the above entry, the goodwill will be reduced by $34,200 and a loss debited in Cullumber's accounts.
Company ABC is required to pay their customers $20,000 after 3 years. Based on an annual effective interest rate of 4%, Andy, the company’s actuary, uses full immunization strategy to construct a portfolio of assets using a 2-year zero-coupon bond and a 4-year zero-coupon bond. Calculate the par amount for the 2-year zero-coupon bond assuming full immunization is met.
Answer:
Par amount = $9,615.39
Explanation:
The condition that must hold in order to meet full immunization are as follows:
Condition 1: PV(assets) = PV(liabilities)
Condition 2: MD(assets) = MD(liabilities) or P'assets = P'liabilities
Condition 3: There is one asset cash inflow before the liability cash outflow, and there is also one asset cash inflow after the liability cash outflow.
Where PV denotes Present Value and MD denotes Macaulay Duration.
PV(liabilities) = Amount required to pay / (1 + i)^n ............ (1)
Where;
Amount required to pay = $20,000
i = interest rate = 4%
n = number of years after = 3 years
Substituting the values into equation (1), we have:
PV(liabilities) = $20,000 / (1 + 4%)^3 = 17,779.93
Let;
A = Weight of two-year-zero-coupon bond in the portfolio
n = Macaulay Duration of n-year-zero-coupon bond
Therefore, we can construct a portfolio of assets using a 2-year zero-coupon bond and a 4-year zero-coupon bond as follows:
A(2) + (1 – A)(4) = 3
2A + 4 – 4A = 3
2A – 4A = 3 – 4
-2A = - 1
A = -1/-2
A = 0.5
We can now calculate the par amount as follows:
Par amount = PV(liabilities) * A * (1 + i)^t .............. (2)
Where t = 2 as the duration of the bond
Substituting the values into equation (2), we have:
Par amount = 17,779.93 * 0.5 * (1 + 4%)^2
Par amount = 17,779.93 * 0.5 * 1.04^2
Par amount = 17,779.93 * 0.5 * 1.0816
Par amount = $9,615.39
Therefore, the par amount for the 2-year zero-coupon bond assuming full immunization is met is $9,615.39.
Jock and Kyla decide to wager, in violation of a state statute, on the outcome of a football game. They each deposit money with Len, who agrees to pay the winner of the bet. Before the game begins, Kyla tells Len that she changed her mind about the bet. Kyla can recover Group of answer choices
Answer:
The amount of her bet only
Explanation:
A wager is a gamble on a particular outcome of a situation. In this case the outcome of a football match.
However wagering in such a manner is a violation of state staute. So this is an illegal activity.
Jock and Kyla deposit funds for the wager with Len. Before the bet of Kyla changes her mind she can recover the money she deposited.
Len will not be able to withhold he deposit because she can sue and claim this is an illegal activity that she does not want to be part of. Len will be forced.to return at least her own money.
A one-month summary of manufacturing costs for Rapid Routers Company follows.
Direct materials $40,000
Direct labour 20,000
Material handling costs 1,500
Product inspection and rework 2,000
Materials purchasing and inspection 500
Routine maintenance and equipment servicing 1,200
Repair of equipment 300
Required:
Classify each cost as value-added or non-value-added
Answer:
Cost Classification
Direct materials Value added
Direct labor Value added
Material handling costs Non-value added
Product inspection and rework Non-value added
Materials purchasing and inspection Value added
Routine maintenance and equipment Non-value added
servicing
Repair of equipment Non-value added
The risk-free rate of return is 3.2 percent and the market risk premium is 4.6 percent. What is the expected rate of return on a stock with a beta of 2.12
Answer:
12.95%
Explanation:
The risk free rate of return is 3.2%
The market risk premium is 4.6%
The beta is 2.12
Therefore, the expected rate of return on a stock can be calculated as follows
= 3.2% + (2.12×4.6%)
= 3.2% + 9.752
= 12.95%
Hence the expected rate of return on a stock is 12.95%
Jordan is the marketing head of Hastings Comprehensive Systems. He usually strives for long-term improvement rather than short-term profit, regardless of the economic environment. In the context of Deming's 14 points of quality, this is an example of
Answer:
Create constancy of purpose
Explanation:
Deming 14 points of quality are recommended management strategy to transform business effectiveness.
Deming postulated that by increasing quality one is able to reduce cost and increase efficiency of a business.
The first of his 14 points is to create a constancy of purpose. This is achieved by striving for long-term improvement rather than short-term profit, as is done by Jordan in the given scenario.
The 14 points of Deming are given below:
Create a constancy of purpose
Adopt the new philosophy
Stop depending on inspections
Using a single supplier for one item
Improve constantly and forever
Use training on the job
Implement leadership
Eliminate fear
Breakdown barriers between departments
Get rid of unclear slogans
Eliminate management by objectives
Remove barriers to pride of workmanship
Implement education and self improvement
Make transformation everyone's job
The before-trade domestic price of tomatoes in the United States is $500 per ton. The world price of tomatoes is $400 per ton. The U.S. is a price-taker in the tomatoes market.
If trade in tomatoes is allowed, the United States:______
a) will experience increases in both consumer surplus and producer surplus.
b) may become either an importer or an exporter of tomatoes, but this cannot be determined.
c) will become an exporter of tomatoes.
d) will become an importer of tomatoes.
Answer:
d) will become an importer of tomatoes.
Explanation:
Consumer surplus would increase because the price at which they buy tomatoes would reduce while producer surplus would reduce because the price of tomatoes would reduce as a result of international trade.
Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.Because the price of tomatoes in the US is greater than the price of tomatoes in the world, when the US begins international trade, it would import tomatoes because it is inefficient in the production of tomatoes.
Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product
he management accountant for Giada's Book Store has prepared the following income statement for the most current year: Cookbook Travel Book Classics Total Sales $68,000 $126,000 $53,000 $247,000 Cost of goods sold 40,000 66,000 21,000 127,000 Contribution margin 28,000 60,000 32,000 120,000 Order and delivery processing 21,000 24,000 11,000 56,000 Rent (per sq. foot used) 2,000 5,000 4,000 11,000 Allocated corporate costs 8,000 8,000 8,000 24,000 Corporate profit $ (3,000) $23,000 $9,000 $29,000 If the cookbook product line had been discontinued prior to this year, the company would have reported ________.
Answer:
Giada's Book Store
The company would have reported a total profit of $19,000, which is $10,000 less.
Explanation:
a) Data and Calculations:
Income statement for the most current year:
Cookbook Travel Book Classics Total
Sales $68,000 $126,000 $53,000 $247,000
Cost of goods sold 40,000 66,000 21,000 127,000
Contribution margin 28,000 60,000 32,000 120,000
Order and delivery processing 21,000 24,000 11,000 56,000
Rent (per sq. foot used) 2,000 5,000 4,000 11,000
Allocated corporate costs 8,000 8,000 8,000 24,000 Corporate profit $ (3,000) $23,000 $9,000 $29,000
Corporate profit = $29,000
less allocated cookbook costs 10,000
Adjusted corporate profit = $19,000
b) Discontinuing the Cookbook product line would have eliminated the contribution the product line makes to defraying Rent and Allocated Corporate costs totalling $10,000 unless the Rental space was a variable cost.
At an output level of 53,000 units, you calculate that the degree of operating leverage is 3.21. If output rises to 57,000 units, what will the percentage change in operating cash flow be? Suppose fixed costs are $175,000. What is the operating cash flow at 46,000 units? The degree of operating leverage? that the degree of operating
Answer:
If output rises to 57,000 units, what will the percentage change in operating cash flow be?
24.23%What is the operating cash flow at 46,000 units?
$45,613.84The degree of operating leverage (at 46,000 units)?
4.84Explanation:
degree of operating leverage = [quantity x (price - variable costs)] / {[quantity x (price - variable costs)] - fixed costs}
degree of operating leverage x {[quantity x (price - variable costs)] - fixed costs} = [quantity x (price - variable costs)]
3.21 x {[53000 x (contribution margin)] - fixed costs} = [53000 x (contribution margin)]
(3.21 x 53000 x contribution margin) - (3.21 x 175000) = 53000 x contribution margin
let C = contribution margin
170130C - 561750 = 53000C
117130C = 561750
C = 561750 / 117130 = 4.795953
operating cash flow (at 53,000) = (53,000 x $4.795953) - $175,000 = $79,185.52
operating cash flow (at 57,000) = (57,000 x $4.795953) - $175,000 = $98,369.32
% change = ($98,369.32 - $79,185.52) / $79,185.52 = 24.23%
operating cash flow (at 46,000) = (46,000 x $4.795953) - $175,000 = $45,613.84
% change in operating cash flows = ($45,613.84 - $79,185.52) / $79,185.52 = -43.4%
% change in sales = (46,000 - 53,000) / 53,000 = -13.21
degree of operating leverage = $220,613.84 / $45,613.74 = 4.84
Which statement thanks respondent for their participation, describes how incentives are received, and reassures them of the confidentiality of their responses
Answer:
Closing statement
Explanation:
Hope it helped
Evaluate the Ritz-Carlton business model and associate key quality characteristics in the operations of a hotel set-up process.
Answer:
Ritz Carlton is luxury hotel chain of America. The company has 101 luxury hotel in more than 30 countries of the world. The success of Ritz Carlton is mainly because they keep the comfort of their guests as their highest priority. Their mission statement clearly states that comfort and genuine care of their guests is utmost important to them.
Explanation:
Their business model focuses entirely on their customers. Ritz Carlton has created its leading brand by providing great ambiance to the visitors and its guest. One can dream of staying at such luxury hotel. They are famous for their hospitality of their guests. The hotel management believes on total quality management. It has set highest standard for themselves and strive to meet them by providing better and better service to its guests.
Despite the theoretical elegance of this hypothesis, empirical studies have come to the opposite conclusion. Despite the favorable effect of international diversification of cash flows, bankruptcy risk was only about the same for MNEs as for domestic firms. However, MNEs faced higher costs for each of the following EXCEPT:
A) agency costs.
B) political risk.
C) asymmetric information.
D) In fact, each of these costs were higher for the MNE than for the domestic firm.
Answer:
D) In fact, each of these costs were higher for the MNE than for the domestic firm.
Explanation:
It has been concluded through empirical studies, that Multinational Enterprises, MNEs encounters various factors leading to lower debt ratios and a higher cost of long-term debt, such as greater agency costs, political risk, asymmetric information, and foreign exchange risk,
Hence, given the question above, the right answer is option D "In fact, each of these costs was higher for the MNE than for the domestic firm."
In marketing his wooden pens and pencils to specialty-shop customers. What marketing straregy Roben was using and why?
Answer:
concentrated marketing
The simple rate of return is also called all of the following except ________. annual rate of return unadjusted rate of return accounting rate of return
Answer: annual rate of return
Explanation:
The simple rate of return is also called the unadjusted rate of return or the accounting rate of return.
The simple rate of return is calculated when the incremental net operating income for the year is taken and then divided by the initial investment.
It should be noted that it's not called the annual rate of return.
What is the expected annual capital gain yield for Orange Corp stock, based on the Constant Dividend Growth Model
Complete Question:
What is the expected annual capital gain yield for Orange Corp stock, based on the Constant Dividend Growth Model? The company plans to pay an annual dividend of of $4.12 per share in one year. The expected annual growth rate of the dividend is 12.9%, and the required rate of return for the stock is 16.63%. Answer as a percentage, 2 decimal places (e.g., 12.34% as 12.34).
Answer:
12.9%
Explanation:
As we know that:
Capital Gain Yield = (P1 - P0) / P0
Step 1: Find P0
Po = D1 / (Ke - g)
Here
D1 is $4.12 per share
Ke is 16.63%
g is 12.9%
By putting values, we have:
Po = $4.12 / (16.63% - 12.9%)
= $110.46
Step 2: Find P1
P1 = D2 / (Ke - g)
Here
D2 = D1 * (1 + 12.9%) = $4.12 per share * (1 + 12.9%) = $4.65
Ke is 16.63%
g is 12.9%
By putting values, we have:
Po = $4.65 / (16.63% - 12.9%)
= $124.70
Step3: Find Annual Capital Gain Yield
Capital Gain Yield = (P1 - P0) / P0
Now by putting values, we have:
Capital Gain Yield = ($124.7 - $110.46) / $110.46
= 12.9%
Mullineaux Corporation has a target capital structure of 70 percent common stock, 5 percent preferred stock, and 25 percent debt. Its cost of equity is 11 percent, the cost of preferred stock is 5 percent, and the pretax cost of debt is 7 percent. The relevant tax rate is 35 percent. What is Mullineaux WACC
Answer:
Mullineaux Corporation
WACC (Weighted Average Cost of Capital):
WACC = (11% of 70%) + (5% of 5%) + (7% of 25%) (1 - 35%)
= 0.077 + 0.0025 + 0.0175(65%)
= 0.09087
= 9.1%
Explanation:
Target Capital Structure:
Common stock = 70%
Preferred stock = 5%
Debt = 25%
Total = 100%
Cost of:
Equity = 11%
Preferred stock = 5%
Debt (pretax) = 7%
Tax rate = 35%
Mullineaux's WACC is the weighted average cost of its capital sources, including equity and debt. It means that Mullineaux Corporation has to weigh each class of capital based on their capital structure weights in order to calculate the average. This WACC therefore represents the hurdle rate which a project must meet for Mullineaux Corporation to accept or reject the project.
Refer to the following lease amortization schedule. The five payments are made annually starting with the inception of the lease. A $2,000 bargin purchase option is exercisable at the end of the five-year lease. The asset has an expected economic life of eight years.
Lease Payment Cash Payment Effective Interest Decrease in Balance Balance
34,600
1 8,000 ?? ?? 26,600
2 8,000 2,660 5,340 21,260
3 8,000 2,126 5,874 15,386
4 8,000 1,539 6,461 8,925
5 8,000 ?? ?? ??
6 2,000 182 1,818 0
What is the effective annual inerest rate?
A. 9%
B. 10%
C. 11%
D. 20%
Answer:
B. 10%
Explanation:
The computation of the effective annual interest rate is shown below:-
Effective annual interest rate = Lease payment third effective interest ÷ Lease payment second balance × 100
= $2,126 ÷ $21,260 × 100
= 10%
Therefore for computing the effective annual interest rate we simply applied the above formula.
Hence the correct option is B.
Explain how you would value a stock. Provide an example of a valuation of a stock based on retrieved real data. Include evidence of the retrieved data in your answer. Compare your valuation with the actual price of the stock at the designated time for your valuation.
Answer with Explanation:
There are numerous stock valuing models but here, I will use Dividend Valuation Model which is based on finding the intrinsic value of Stock which is the present value of the stock at a required rate of return. The formula to calculate Intrinsic value of stock is given as under:
P0= D0 * (1 + g) / (ke - g)
Here
P0 is the intrinsic value of the stock
D0 is the dividend just paid
g is the growth rate
ke is the investor's required rate of return
The model doesn't holds if the company doesn't pays Dividend.
Now suppose that the Dividend just paid by Apple is $20 per stock. The anticipated growth rate of dividend is 10% and the required rate of return is at 15%.
By putting values in the above equation, we have:
P0= $20 * (1 + 10%) / (15% - 10%)
= $20 / (15% - 10%)
= $400 per share
The value of stock of Apple is $400 per share which must be its fair market value as per the Dividend Valuation Model.
As per the model, if the value of stock is higher as per dividend valuation model then we must purchase the stock as it will generate higher value and vice versa. The inherent limitation of the model is that it assumes that the dividend is growing at constant rate and is consistently paid. The main disadvantage of Dividend valuation model is that it doesn't account for political factors, economical factors, evolving business risks, technological factors, etc.
You are considering two ways of financing a spring break vacation. You could put it on your credit card, at 17% APR, compounded monthly, or borrow the money from youe parents, who want an interest payment of 6% every six months. which is the lower rate? (Dont round intermediate steps to decimal places)
Answer: Parent's rate is lower.
Explanation:
The lower rate will be the lower Effective Annual rate, the formula of which is;
[tex]EAR = (1 + interest rate/compounding frequency) ^{compounding frequency} - 1[/tex]
Credit Card
[tex]EAR = (1 + interest rate/compounding frequency) ^{compounding frequency} - 1[/tex]
[tex]EAR = (1 + interest rate/compounding frequency) ^{compounding frequency} - 1\\= ( 1 + \frac{0.17}{12})^{12} - 1\\= 0.184[/tex]
= 18.4%
From your parents
[tex]EAR = (1 + interest rate/compounding frequency) ^{compounding frequency} - 1\\= ( 1 + 0.07) ^{2} - 1\\= 0.1449[/tex]
= 14.5%
Parent's rate is lower.
Yasmin Co. can further process Product B to produce Product C. Product B is currently selling for $33 per pound and costs $28 per pound to produce. Product C would sell for $58 per pound and would require an additional cost of $25 per pound to produce. What is the differential cost of producing Product C?
Answer:
Differential cost is $0
Explanation:
A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost.
Additional sales revenue = Sales revenue after further processing - sales revenue after split-off point
. A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost.
Also note that all cost incurred up to the split-off point are irrelevant to the decision to process further .
$
Sales after split off point (Product C) 58
Sales at the split off point (Product B) 33
Additional sales revenue 25
Further processing cost (25)
Differential cost 0
Differential cost is $0
Activity-Based Costing: Selling and Administrative Expenses Jungle Junior Company manufactures and sells outdoor play equipment. Jungle Junior uses activity-based costing to determine the cost of the sales order processing and the customer return activity. The sales order processing activity has an activity rate of $20 per sales order, and the customer return activity has an activity rate of $100 per return. Jungle Junior sold 2,500 swing sets, which consisted of 750 orders and 80 returns.
Required:
a. Determine the total sales order processing and customer return activity cost for swing sets.
b. Determine the per-unit sales order processing and customer return activity cost for swing sets. Round your answer to the nearest cent.
Answer: 1}ToTAL Activity cost =$23,000
2a) Sales order Processing Activity per unit sale=$6.00
2b)customer return activity per unit sale=$3.20
Explanation:
a. total sales order processing and customer return activity cost for swing sets
Sales order Processing Activity =Number of orders x rate per sales order
=750 x 20 = $15,000
customer return activity = Number of returns x rate per return
= 80 x 100= $8,000
ToTAL Activity cost = Sales order Processing Activity +customer return activity= $15,000 + $8000 = $23,000
b)per-unit sales order processing and customer return activity cost for swing sets
Cost of Sale order processing = $15,000
Number of swing set sold = 2,500
Therefore Sales order Processing Activity per unit sale = Cost of Sale order processing/ Number of swing set sold = $15,000/ 2,500= $6.00
customer return activity cost = $8,000
Number of swing set sold = 2,500
Therefore customer return activity per unit sale= customer return activity cost / Number of swing set sold = $8,000/ 2,500= $3.20
ToTAL Activity cost per unit sale = Sales order Processing Activity cost per unit +customer return activity cost per unit = $6.00 + $3.20 = $9.20
