Answer:
Gourmet Grill Company
1. Sales Budget For the Month Ending July 31
Product Area Unit Sales Unit Selling Total
Volume Price Sales
Backyard Chef: Maine 310 $700 $217,000
Vermont 240 750 180,000
New Hampshire 360 750 270,000
Total 910 667,000
Master Chef: Maine 150 1,200 180,000
Vermont 110 1,300 143,000
New Hampshire 180 1,400 252,000
Total 440 575,000
Total revenue from sales $1,242,000
2. Gourmet Grill Company Production Budget For the Month Ending July 31 Units
Units Backyard Chef Master Chef Total
Expected units to be sold 910 440 1,350
Desired inventory, July 31 40 22 62
Total units available 950 462 1,412
Estimated inventory, July 1 -30 -32 62
Total units to be produced 920 430 1,350
3. Gourmet Grill Company
Direct Labor Cost Budget
For the Month Ending July 31
Stamping Forming Assembly
Units Department Department Department
Backyard Chef 920 460 hrs 552 hrs 920 hrs Master Chef 430 258 hrs 344 hrs 645 hrs
Total Hours required
for production: 718 hrs 896 hrs 1,565 hrs
Total Hourly rate $17 $15 $14
Total direct labor cost $12,206 $13,440 $21,910
Explanation:
1) Data:
A. Estimated sales for July by sales territory:
Maine:
Backyard Chef 310 units at $700 per unit
Master Chef 150 units at $1,200 per unit
Vermont:
Backyard Chef 240 units at $750 per unit
Master Chef 110 units at $1,300 per unit
New Hampshire:
Backyard Chef 360 units at $750 per unit
Master Chef 180 units at $1,400 per unit
B. Estimated inventories at July 1:
Direct materials:
Grates 290 units
Stainless steel 1,500 lbs.
Burner subassemblies 170 units
Shelves 340 units
Finished products:
Backyard Chef 30 units
Master Chef 32 units
C. Desired inventories at July 31:
Direct materials:
Grates 340 units
Stainless steel 1,800 lbs.
Burner subassemblies 155 units
Shelves 315 units
Finished products:
Backyard Chef 40 units
Master Chef 22 units
D. Direct materials used in production:
In manufacture of Backyard Chef:
Grates 3 units per unit of product
Stainless steel 24 lbs. per unit of product
Burner subassemblies 2 units per unit of product
Shelves 4 units per unit of product
In manufacture of Master Chef:
Grates 6 units per unit of product
Stainless steel 42 lbs. per unit of product
Burner subassemblies 4 units per unit of product
Shelves 5 units per unit of product
E. Anticipated purchase price for direct materials:
Grates $15 per unit
Stainless steel $6 per lb.
Burner subassemblies $110 per unit
Shelves $10 per unit
F. Direct labor requirements:
Backyard Chef:
Stamping Department 0.50 hr. at $17 per hr.
Forming Department 0.60 hr. at $15 per hr.
Assembly Department 1.00 hr. at $14 per hr.
Master Chef:
Stamping Department 0.60 hr. at $17 per hr.
Forming Department 0.80 hr. at $15 per hr.
Assembly Department 1.50 hrs. at $14 per hr.
b) Calculations:
Stamping Forming Assembly
Units Department Department Department
Backyard Chef 1 0.50 hr 0.60 hr 1.00 hr
Total hours required 920 460 hrs 552 hrs 920 hrs
Master Chef 1 0.60 hr 0.80 hr 1.50 hrs
Total hours required 430 258 hrs 344 hrs 645 hrs
Total Hours required
for production: 718 hrs 896 hrs 1,565 hrs
c) Gourmet Grill Company's Sales, Production, and Direct Labor Budgets for July detail the sales units under different product categories and areas. They will guide the management of Gourmet Grill company to make relevant decisions with regard to inventories, production, and sales volume that must be achieved in order to realize the budgets and attin company's objectives. They are very essential in planning, decision making, and control. Based on these budgets, performances will be reviewed, analyzed, and accordingly rewarded.
TB MC Qu. 9-291 Kartman Corporation makes a product with ... Kartman Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 8.2 pounds $ 8.70 per pound $ 71.34 Direct labor 0.3 hours $ 41.00 per hour $ 12.30 Variable overhead 0.3 hours $ 5.70 per hour $ 1.71 In June the company's budgeted production was 5,100 units but the actual production was 5,200 units. The company used 23,850 pounds of the direct material and 2,460 direct labor-hours to produce this output. During the month, the company purchased 27,100 pounds of the direct material at a cost of $187,180. The actual direct labor cost was $58,721 and the actual variable overhead cost was $13,331. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead rate variance for June is:
Answer:
Variable manufacturing overhead rate variance= $688.8 favorable
Explanation:
Giving the following information:
Variable overhead 0.3 hours $5.70 per hour
The company used 2,460 direct labor-hours to produce this output. The actual variable overhead cost was $13,331.
To calculate the variable overhead rate variance, we need to use the following formula:
Variable manufacturing overhead rate variance= (standard rate - actual rate)* actual quantity
Actual rate= 13,331/2,460= $5.42
Variable manufacturing overhead rate variance= (5.7 - 5.42)*2,460
Variable manufacturing overhead rate variance= $688.8 favorable
The stock ABC has a beta of 1.6 and its standard deviation is 30%. Its correlation coefficient with the market return is 0.8. What is the standard deviation of the market return? A. None of the answers is correct B. 18% C. 20% D. 15%
Answer: D. 15%
Explanation:
Beta is given as 1.6 but is calculable by the formula;
Beta = Correlation Coefficient of stock with market returns * [tex]\frac{Standard Deviation of stock returns}{Standard Deviation of market returns}[/tex]
1.6 = 0.8 * 30%/Sdm
30% /Sdm = 1.6/0.8
30% / Sdm = 2
Sdm * 2 =30%
Sdm = 30%/2
Sdm = 15%
Cecilia is observing assembly line workers performing their tasks. She's watching to see who they interact with, what machines they use, and how much they are supervised. Cecilia is most likely conducting a:_________.
A) work flow analysis.
B) performance appraisal.
C) job redesign.
D) job analysis.
Answer:
Option D (Job analyses) is the correct choice.
Explanation:
Assessment including its particular characteristics of such a job profile by careful evaluation including a critical review of the systematic tasks, facilities needed, employment conditions, as well as development level in some kind of an employee typically as either a complementary approach towards a job description.Analysis of career helps in understanding which assignments are relevant and how they've been conducted out.Some other options don't apply to the format prescribed. So option D is indeed the right one.
iv. What is the essential tool (and subtypes) for seeing the big picture and revealing large information about the data series
Answer:
Ms Excel
Explanation:
This software is popular among businesses today, which they use in performing data analysis. Often called a spreadsheet application, Ms (Microsoft) Excel allows businesses to see the bigger picture and revealing large information about the data series.
For example, by using Ms Excel, a business can look up the percentage differences in its revenue turnover for a period time (quarterly, monthly or yearly), by simply imputing their data series.
In Shanghai, China, sellers of various fake watches have historically approached tourists as they exited tour buses, offering to sell the watches. The sellers then attempted to haggle with each of the tourists individually. What pricing strategy does this behavior resemble
Answer:
Price Discrimination
Explanation:
Price discrimination defines that when one seller sells one product at different prices to different customers.
According to the given situation, Sellers of different fake watches contacted visitors as they were leaving bus tours and offering to sell them. The sellers then personally tried to haggle for each of the visitors, here sellers wants to sell the same product at different prices for his benefit. This indicates the price discrimination.
Welcome Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. Welcome Inc. is most likely doing this to:
Answer:
reduce its cultural distance from the other countries
Explanation:
In this scenario, Welcome Inc. is most likely doing this to reduce its cultural distance from the other countries. Cultural distance refers to the differences in cultural values amongst countries, organizations, and stakeholders. In this case, Welcome Inc is trying to reduce this by making sure that they adjust their products and services to best accommodate these specific cultural differences in each country. In doing so they gain more loyal customers and increase their profits in each country which they do business in.
El 5 de diciembre se solicitó un préstamo por USD.275,000, negociado al 6.5%
de interés anual a un plazo de 5 años. Los pagos de capital e intereses se harán
mensualmente.
Ready Company has two operating (production) departments: Assembly and Painting. Assembly has 280 employees and occupies 55,200 square feet; Painting has 120 employees and occupies 36,800 square feet. Indirect factory expenses for the current period are as follows: Administration $ 86,000 Maintenance $ 102,000 Administration is allocated based on workers in each department; maintenance is allocated based on square footage. The total amount of indirect factory expenses that should be allocated to the Painting Department for the current period is:
Answer:
$61,200
Explanation:
Maintenance expenses allocated to assembly department
Allocation base = Square footage
= $102,000 * $55,200 / ($55,200 + $36,800)
= $102,000 * $55,200 / $92,000
= $61,200
Henry Crouch's law office has traditionally ordered ink refills 50 units at a time. The firm estimates that carrying cost is 35% of the $12 unit cost and that annual demand is about 235 units per year. The assumptions of the basic EOQ model are thought to apply. For what value of ordering cost would its action be optimal?
Answer:
ordering costs = $22.34
Explanation:
economic order quantity (EOQ) = √(2SD / H)
D = annual demand = 235H = holding cost = 35% x $12 = $4.20S = cost per order = ?EOQ = 5050 = √[(2 x S x 235) / $4.20]
2,500 = (2 x S x 235) / $4.20
$10,500 = 2 x S x 235
S = $10,500 / (2 x 235) = $10,500 / 470 = $22.34
Lawrence Industries' most recent annual dividend was $2.28 per share (D0=$2.28), and the firm's required return is 13%. Find the market value of Lawrence's shares when dividends are expected to grow at 8% annually for 3 years, followed by a 7% constant annual growth rate in years 4 to infinity.
Answer:
Value of stock = $41.75
Explanation:
The price of a stock using the dividend valuation model is the present value of the the future dividend expected from the stock discounted at the required rate of return.
value of dividend from year 1 to 3
Year Present Value
1 2.28× 1.08^1 × 1.13^(1-) = 2.179
2 2.28× 1.08^2 × 1.13^(-2) = 2.083
3. 2.28 × 1.08^3 × 1.13^(-3)= 1.991
Present value of Dividend in Year 4 and beyond
This will be done in two steps
Step 1 :PV in year 3 terms
= Dividend in year 4× (1.06)/(0.1-0.06)
2.28 × 1.08^3 × 1.07/(0.13-0.07)= 51.220
step 2 : PV in year 0 terms =
PV in year 3 × 1.1^(-3)
=51.220 × 1.13^(-3)= 35.498
Value of stock = 2.179 +2.083 +1.991 + 35.498 = 41.75
Value of stock = $41.75
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%
Suppose the following financial data were reported by 3M Company for 2019 and 2020 (dollars in millions). 3M Company Balance Sheets (partial) 2020 2019 Current assets Cash and cash equivalents $ 3,008 $1,899 Accounts receivable, net 3,110 3,065 Inventories 2,675 3,017 Other current assets 1,890 1,542 Total current assets $10,683 $9,523 Current liabilities $ 4,974 $5,821 (a) Calculate the current ratio and working capital for 3M for 2019 and 2020.
Answer:
Current ratio = Current Assets / Current Liability
Current ratio 2019 = 9,523 / 5,821
Current ratio 2019 = 1.64 : 1
Current ratio 2020 = 10,683 / 4,974
Current ratio 2020 = 2.15 : 1
Working Capital = Current asset - Current liability
Working capital 2019 = $9,523 - $5,821
Working capital 2019 = $3,702
Working capital 2020 = $10,683 - $4,974
Working capital 2020 = $5,709
Sonic Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, prepare (a) a sales budget and (b) a production budget: Rumble Thunder Estimated inventory (units), June 1 750 300 Desired inventory (units), June 30 500 250 Expected sales volume (units): Midwest Region 12,000 3,500 South Region 14,000 4,000 Unit sales price $60 $90 a. Prepare a sales budget.
Answer: please see explanation column
Explanation:
Rumble Thunder
Estimated inventory (units), June 1 750 300
Desired inventory (units), June 30 500 250
Expected sales volume (units):
Midwest Region 12,000 3,500
South Region 14,000 4,000
Unit sales price $60 $90
a) Sonic Inc. Sales Budget for June
Unit Sales Vol Unit Selling price Total Sales
Model Rumble:
Midwest Region 12000 60 $720,000
South Region 14000 60 $840,000
Total 1,560,000
Model Thunder:
Midwest Region 3500 $90 $315,000
South Region 4000 $90 $360,000
Total $675,000
Total revenue from sales 1,560,000 + $675,000 =$2,235,000
B) Sonic Inc. Production budget for June
Units Model Rumble Units Model Thunder
Expected units to be sold 26000 7500
Add: Desired ending inventory + 500 + 250
Total units required 26500 7750
Less: Beginning inventory - 750 - 300
Total units to be produced $25750 $ 7450
Calculation :
Expected units to be sold =12,000 + 14,000 = $26,000
3,500 + 4,000 = $7,500
Total units required=Expected units to be sold+ Desired ending inventory
26000 +500 =$26,500
7,500 +250= $7,750
A manufacturer of hospital supplies has a uniform annual demand for 500,000 boxes of bandages. It costs $10 to store one box of bandages for one year and $250 to set up the plant for production. How many times a year should the company produce boxes of bandages in order to minimize the total storage and setup costs?
Answer: company can produce boxes 100 times per year.
Explanation:
Ordering cost per order, S = $250
Annual demand, D = 500,000
Holding or carrying cost per unit, = $10
Economic order Quantity = [tex]\sqrt{2 x Annual demand X ordering cost /carrying cost}[/tex]
=[tex]\sqrt{ 2 X 500,000 X 250 /10}[/tex] = [tex]\sqrt{25,000,000}[/tex] = 5000
Optimal order quantity = 5000 boxes.
Number of times company can produce boxes = Annual Demand/ Optimal order quantity = 500,000 / 5000 = 100 times
A(n) ________ is designed to build customer goodwill, collect customer feedback, and supplement other sales channels rather than sell the company's products directly.
Answer: a corporate website
Explanation: A corporate website is one that is designed to build customer goodwill, collect customer feedback, and supplement other sales channels rather than sell the company's products directly. It is also known as a brand website. However, a marketing website will engage consumers in interactions that will move them closer to a direct purchase or some other marketing outcome .
Which third-party conflict resolution strategy manages the process and context of interaction between the disputing parties but does not impose a solution on the parties
Answer: Mediation
Explanation:
Mediation is a conflict resolution procedure whereby the parties that are involved will discuss their disputes and a third person who is impartial and also trained assists them in settling the dispute.
Meditation manages the process and context of interaction between the disputing parties but does not impose a solution on the parties.
Willow Corporation had three employees. Two of the employees worked full-time and earned salaries of $25,000 each. The third employee worked only part-time and earned $3,000. The employer timely paid state unemployment tax equal to 5.4 percent of each employee's wages up to $7,000. How much FUTA tax is due from Willow Corporation for 2019, after the credit for state unemployment taxes?
Answer:
$102
Explanation:
FUTA tax due from Willow Corporation for 2019, after the credit for state unemployment taxes, can be calculated by deducting the Paid state unemployment tax by the FUTA tax.
DATA
Paid State Unemployment Tax = (7,000+7,000+3,000) x 5.4%
Paid State Unemployment Tax = $918
FUTA tax rate in 2019 = 6%
Solution
FUTA tax (6% x $17,000) = $1,020
FUTA tax due = $1,020 - $918
FUTA tax due = $102
J. Ross and Sons Inc. has a target capital structure that calls for 40 percent debt, 10 percent preferred stock, and 50 percent common equity. Ross' common stock currently sells for $40 per share. The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 10 percent per year. J. Ross's cost of retained earnings is closest to:
Answer:
J. Ross's cost of retained earnings is 18.33%
Explanation:
Cost of retained earnings is also call Cost of Equity
Cost of retained earnings = (Dividend per share for next year / Current market value of stock) + Growth rate of dividend
Cost of retained earnings = 2 / 40(1-40%) + 10%
Cost of retained earnings = 2 / 24 + 10%
Cost of retained earnings = 0.08333 + 0.1
Cost of retained earnings = 0.183333
Cost of retained earnings = 18.3333%
Cost of retained earnings = 18.33%
The Retained earnings account for Nathan Corporation had a credit balance of $800,000 at the end of 2016. Selected transactions during 2017 follow:
a. Net income was $130,000.
b. Cash dividends declared were $60,000
c. Repurchased 100 shares of Nathan Corporation common stock, paying S20 per share. Each share has a $5 par value and was originally issued for $35.
d. Sold 20 shares of Nathan Corporation common stock for $22 each.
Required:
Calculate Nathan's retained earnings balance as of the end of 2011. How large of a dividend could Nathan have declared in 2011?
Answer:
1 & 2. $870,000
Explanation:
1. Retained Earnings is an equity account from which dividends are paid. The Net Income is added to this and the dividends are deducted from this.
Retained Earnings for the year = Beginning balance + Net Income - Dividends
= 800,000 + 130,000 - 60,000
= $870,000
2. Nathan Corporation could have declared the entire retained earnings of $870,000. This is however, not a recommended action because the Retained Earnings maintain a cushion for the company and as such contribute to financial health and structure of the company.
"In using the net present value approach, a project is acceptable if the project's net present value is ____________ or_______________."
Answer:
Zero or Positive.
Explanation:
The project should be accepted if the NPV (net present value) is “zero” or “positive” because the zero value means that the project will not be in loss. However, the positive value shows that the project will give profit. But if there is a negative value of net present value then it reflects that the project is giving a loss. Therefore, the project with negative NPV must be rejected. And the project that has zero net present value or positive net present value should be accepted.
XYZ, Inc. has a beta of 0.8. The yield on a 3-month T-bill is 5%, and the yield on a 10-year T-bond is 7%. The market risk premium is 5.5%, and the return on an average stock in the market last year was 20%. What is the estimated cost of common equity using the CAPM? Show your work
Answer:
the estimated cost of common equity using the CAPM is 11.40 %.
Explanation:
Cost of Equity = Return on the Risk Free Security + Beta × Return on Market Portfolio
= 7.00 % + 0.8 × 5.5%
= 11.40 %
The estimated cost of common equity using the CAPM is 11.40 %.
Calculation of the cost of common equity;Since the return on risk-free rate is 7%, beta is 0.8 and, the market risk premium is 5.5%
So here the cost of common equity should be
= Return on the Risk Free + Beta × Market risk premium
= 7.00 % + 0.8 × 5.5%
= 11.40 %
Hence, The estimated cost of common equity using the CAPM is 11.40 %.
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Suppose that the residents of Vegi-Topia spend all of their income on cauliflower, broccoli, and carrots. In 2013, they buy 50 heads of cauliflower for $2 each, 60 bunches of broccoli for $1.5 each, and 200 carrots for $0.10. In 2014, they buy 75 heads of cauliflower for $2 each, 70 bunches of broccoli for $1.50 each, and 500 carrots for $0.20 each. In 2015, they buy 80 heads of cauliflower for $3, 90 bunches of broccoli for $2, and 500 carrots for $0.25 each. If the base year is 2015, what is the inflation for 2014
Answer:
Inflation for 2014 is 11%
Explanation:
Inflation refers to a quantitative measure of the rate of an increase in the average price level of a selected basket of commodities in an economy over a specified period of time.
The inflation rate for 2014 can be calculated as follows:
Since 2015 is the base year, the it implies that the basket we are going to use contains 80 heads of cauliflower, 90 bunches of broccoli, and 500 carrots.
Therefore, cost of basket for each year can be determined as follows:
2013 cost of basket = ∑(Unit price in 2014 * Quantity in 2015) = ($2 * 80) + ($1.50 * 50) + ($0.10 * 500) = $285
2014 cost of basket = ∑(Unit price in 2014 * Quantity in 2015) = ($2 * 80) + ($1.50 * 50) + ($0.20 * 500) = $335
2015 cost of basket = ∑(Unit price in 2015 * Quantity in 2015) = ($3 * 80) + ($2 * 50) + ($0.25 * 500) = $465
The CPI for each year can be determined using the following for formula:
CPI of a year = Current period cost of basket / Base year cost of basket …………… (1)
As 2015 is the base year, using equation (1), we have:
2013 CPI = (2013 cost of basket / 2015 cost of basket) * 100 = $285 / $465 = 0.61 * 100 = 61
2014 CPI = (2014 cost of basket / 2015 cost of basket) * 100 = $335 / $465 = 0.72 * 100 = 72
2015 CPI = (2015 cost of basket / 2015 cost of basket) * 100 = $465 / $465 = 1 * 100 = 100
The inflation for a year can be determined as follows:
Inflation = (CPI in the current year - CPI in previous year) / CPI in the base year ..................... (2)
Using equation (2), we have:
Inflation for 2014 = (CPI in 2014 - CPI in 2013) / CPI in 2015 = (72 - 61) / 100 = 11 / 100 = 0.11, or 11%
Brennan's Boats is considering a project which will require additional inventory of $128,000, will decrease accounts payable by $7,000, and will increase accounts receivable by $56,000. What is the initial project cash flow needed for net working capital?
Answer:
$191,000
Explanation:
Brennan's Boats is considering a project in this, the initial project cash flow needed for net working capital is $ 191,000.
What do you mean by the net working capital?The difference between a company's short-term assets and its short-term debts and liabilities is known as net working capital (NWC). Positive net working capital is excellent since it shows that a company's financial obligations have been met and allows it to invest in other operational needs.
Current assets less Current Liabilities equals Working Capital. An entity has a working capital deficiency, also known as a working capital deficit and negative working capital, if current assets are fewer than current liabilities.
Here,
Calculation of net working capital (NWC):
Net working capital = $128,000 + 7,000 + 56,000
Net working capital = $191,000.
Therefore, Brennan's Boats is considering a project in this, the initial project cash flow needed for net working capital is $ 191,000.
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assume the following information about the market and JumpMaster's stock. JumpMaster's beta = 1.50, the risk free rate 2%, the market risk premium is 10.0%. Using CAPM, what is the expected return for JumpMaster's stock?
Answer:
Expected market return = 17%
Explanation:
Given the Jump master’s beta = 1.50
Risk free rate = 2%
Market risk premium = 10%
To find the expected return we have to use the below formula.
Expected market return = Riskfree rate + Beta × Market risk premium
Now insert all the values in order to get the expected market return.
Expected market return = 2 + 1.50 × 10
Expected market return = 17%
Data related to the inventories of Costco Medical Supply are presented below: Surgical Equipment Surgical Supplies Rehab Equipment Rehab Supplies Selling price $ 276 $ 134 $ 354 $ 152 Cost 156 136 255 152 Costs to sell 17 17 16 7 In applying the lower of cost or net realizable value rule, the inventory of surgical supplies would be valued at:
Answer:
$117
Explanation:
Costco Medical Supply's merchandise inventory:
Surgical equip. Surgical supplies Rehab equip. Rehab supplies
Selling price $276 $134 $354 $152
Cost $156 $136 $255 $152
Cost to sell $17 $17 $16 $7
Net realizable V. $259 $117 $338 $145
If we apply the lower of cost or net realizable rule for determining the value of surgical supplies, its value would be: $117 < $136
When we use the lower of cost or net realizable rule, we should value our inventory at the lowest value between original purchase cost and current net realizable value of the products.
A share of stock is now selling for $120. It will pay a dividend of $10 per share at the end of the year. Its beta is 1. What must investors expect the stock to sell for at the end of the year? Assume the risk-free rate is 6% and the expected rate of return on the market is 18%. (Round your answer to 2 decimal places.)
Answer:
P1 = 131.6566627 rounded off to $131.66
Explanation:
To calculate the price of the stock at the end of the year or P1, we first need to determine the required rate of return on the stock and the growth rate in dividends.
The required rate of return can be found using the CAPM equation. The formula for required rate of return under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free rate rM is the return on market
r = 0.06 + 1 * (0.18 - 0.06)
r = 0.18 or 18%
Now we assume that the stock is a constant growth stock which means that the growth in dividends is expected to be constant throughout. The price of such a stock is found using the constant growth model of DDM. The formula for price today under the constant growth model is,
P0 = D1 / (r - g)
Where,
P0 is price today D1 is expected dividend for the next period g is the growth rate in dividends
Plugging in the available variables, g is,
120 = 10 / (0.18 - g)
120* (0.18 - g) = 10
21.6 - 120g = 10
g = (10 - 21.6) / -120
g = 0.096667 or 9.6667% rounded off to 9.67%
So to calculate the price at the end of the year or P1, we will use D2.
P1 = 10 * (1+0.0967) / (0.18 - 0.0967)
P1 = 131.6566627 rounded off to $131.66
If a firm pays labor $5 and receives a MPL of 10, while paying capital $100 and receiving a MPC of 100, to lower production costs it should hire more labor and less capital.
a. True
b. False
Answer:
True
Explanation:
Here, we want to evaluate the validity of the given statement whether true or false.
The correct answer is true.
For a firm that pays $5 labor and receives a MPL of 10, while paying capital of $100, and receiving a MPC of 100, to lower production costs, it should higher more labor and less capital.
Ray's Satellite Emporium wishes to determine the best order size for its best-selling satellite dish (model TS111). Ray has estimated the annual demand for this model at 1,500 units. His cost to carry one unit is $80 per year per unit, and he has estimated that each order costs $22 to place.
Using the EOQ model, how many should Ray order each time?
Answer:
28.72 units
Explanation:
Calculation of how many should Ray order each time using EOQ model
Using this formula
EOQ= √2DS/H
Where,
D=Annual demand 1,500 units
S=Order costs $22
H=Holding Costs $80 per unit
Let plug in the formula
EOQ=√2*1,500*$22/$80
EOQ=√66,000/$80
EOQ=√825
EOQ=28.72 units
Therefore Using the EOQ model, Ray should order 28.72 units each time.
difference between Kenyan and china culture
Chinese culture is one of the world's oldest cultures, tracing back to thousands of years ago. Important components of Chinese culture includes ceramics, architecture, music, literature, martial arts, cuisine, visual arts, philosophy and religion
Suppose a period of continuous political instability leads to people to believe that the economy will slide into a deep recession. As a result, people become more likely to accept ________ money in exchange for goods and services.
A. Flat
B. Commodity
U.S. Dollars are an example of _____ money.
A. Flat
B. Commodity
Answer:
The answer is:
1. Commodity
2. Fiat
Explanation:
We have two questions here.
First, the answer is commodity money. Commodity money is the type of money whose value are tied to the commodity it is made up of. This is used as a medium of exchange when the value of money falls totally (during inflation or hyperinflation.) Examples of commodity money can be gold, cocoa,copper etc.
Second question. The answer is fiat money. Fiat money is the currency issued by the national government of a country through The Fed(in US) or Central banks (in most countries).
The fiat money in US is the US dollar, for Nigeria is Nigerian naira etc. It is a legal tender in those countries.