a. The leverage-adjusted duration gap is 8232250 and the risk Fl facing is interest rate risk. b. The impact on equity value is 14967.73. c. The desired duration gap for a financial institution if interest rates are expected to increase or decrease is a negative duration gap or a positive duration gap respectively. d. The change in the market value of equity is -22453.10. e. The duration of the assets need to be 1.8975. f. i. FI can sell bond futures to hedge its interest rate risk exposure. ii. The number of futures contracts to be used to fully hedge the balance sheet is 9113.42. g. The basis risk adjustment ratio refers to the ratio of spot price variation to futures price variation. The number futures contracts is 12025.72. Optimal hedge ratio would need to be calculated using the covariance and variance of the spot and futures prices.
a. The leverage-adjusted duration gap is the difference between the duration of the assets and the duration of the liabilities, weighted by their respective values. In this case, the leverage-adjusted duration gap is:
LADG = (1 million)(9.94) - (900,000)(1.8975) = 9940000 - 1707750 = 8232250
The FI is facing interest rate risk, as the value of its assets and liabilities will change with changes in market interest rates.
b. The impact on equity value if the relative change in market interest rates is a decrease of 20 basis points is:
ΔE = -LADG * (ΔR/(1+R)) = -8232250 * (-0.002/(1+0.10)) = 14967.73
c. The desired duration gap for a financial institution if interest rates are expected to increase is a negative duration gap, as this will result in an increase in the value of equity. Conversely, if interest rates are expected to decrease, the desired duration gap is a positive duration gap, as this will result in an increase in the value of equity.
d. The change in the market value of equity assuming that the relative change in all market interest rates is an increase of 30 basis points is:
ΔE = -LADG * (ΔR/(1+R)) = -8232250 * (0.003/(1+0.10)) = -22453.10
e. The duration of the assets would need to be equal to the duration of the liabilities in order to immunize the equity from changes in market interest rates. In this case, the duration of the assets would need to be 1.8975.
f. i. Futures can be used to hedge the risk faced by the FI by taking a position in the futures market that is opposite to the position in the spot market. In this case, the FI can sell bond futures to hedge its interest rate risk exposure.
ii. The number of futures contracts to be used to fully hedge the balance sheet is:
N = (LADG * V)/(Df * Pf) = (8232250 * 1)/(9 * 95) = 9113.42
g. The basis risk adjustment ratio is the ratio of the change in the spot price to the change in the futures price. It is used to adjust the number of futures contracts to account for basis risk. If the ratio were b = 1.32, the number of futures contracts should have been:
N = (LADG * V * b)/(Df * Pf) = (8232250 * 1 * 1.32)/(9 * 95) = 12025.72
The optimal hedge ratio is the ratio of the covariance of the change in the spot price and the change in the futures price to the variance of the change in the futures price. It is used to determine the optimal number of futures contracts to minimize the variance of the hedged portfolio. The optimal hedge ratio in this case would need to be calculated using the covariance and variance of the spot and futures prices.
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Complete the aging schedule. Number of Days Outstanding Accounts Receivable Estimated % Uncollectible Total Estimated Uncollected Accounts 0-45 days $720,000 2% $ 14400 46-90 days 263,000 6% 15780 Over 90 days 113,000 17% Total $1,096,000Prepare the adjusting journal entry to record bad debts expense at June 30 assuming that Granger's allowance for doubtful accounts had a credit balance of $13,500 before adjustment.
The missing total estimated uncollected accounts in the aging schedule are 0-45 days: $14,400, 46-90 days: $15,780, Over 90 days: $19,210, and total: $49,390. The adjusting journal entry are: Dr Bad Debts Expense $35,890 and Cr Allowance for Doubtful Accounts $35,890.
To complete the aging schedule and prepare the adjusting journal entry, we need to calculate the total estimated uncollected accounts for each category and then the total for all categories. We can do this by multiplying the accounts receivable by the estimated % uncollectible for each category. The results are as follows:
0-45 days: $720,000 x 2% = $14,400
46-90 days: $263,000 x 6% = $15,780
Over 90 days: $113,000 x 17% = $19,210
Total: $14,400 + $15,780 + $19,210 = $49,390
Now, to prepare the adjusting journal entry, we need to record the bad debts expense and the allowance for doubtful accounts. The bad debts expense is the difference between the total estimated uncollected accounts and the credit balance of the allowance for doubtful accounts before adjustment. The allowance for doubtful accounts is the total estimated uncollected accounts.
The adjusting journal entry is as follows:
Bad Debts Expense: $49,390 - $13,500 = $35,890
Allowance for Doubtful Accounts: $49,390
The adjusting journal entry at June 30 is:
Debit Bad Debts Expense $35,890
Credit Allowance for Doubtful Accounts $35,890
This entry records the bad debts expense and increases the allowance for doubtful accounts to reflect the total estimated uncollected accounts.
Note: The question is incomplete. The complete question probably is: Complete the aging schedule.
No of Days Outstanding Accounts Receivable Estimated % Uncollectible Total Estimated Uncollected Accounts 0-45 days $720,000 2% $?
46-90 days $263,000 6% $?
Over 90 days $113,000 17% $?
Total $1,096,000 $?
Prepare the adjusting journal entry to record bad debts expense at June 30 assuming that Granger's allowance for doubtful accounts had a credit balance of $13,500 before adjustment.
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Cain Components manufactures and distributes various plumbing products used in homes and other buildings. Over time, the production staff has noticed that products they considered easy to make were difficult to sell at margins considered reasonable while products that seemed to take a lot of staff time were selling well despite recent price increases. A summer intern has suggested that the cost system might be providing misleading information.The controller decided that a good summer project for the intern would be to develop,in one self-contained area of the plant, an alternative cost system with which to compare the current system. The intern identified the following cost pools and, after discussion with some plant personnel, appropriate cost drivers for each pool. There were:Cost Pools Costs Activity DriversReceiving $ 1,181,920 Direct cost materialManufacturing 7,552,000 Machine-hoursMachine setup 1,220,920 Number of setupsShipping $ 1,173,120 Units shippedIn this particular area, Cain produces two of its many products: Standard and Deluxe.The following are data for production for the latest full year of operations:ProductsStandard DeluxeTotal direct material costs $ 550,000 $ 162,000Total direct labor costs $ 960,000 $ 560,000Total machine-hours 200,000 120,000Total number of setups 106 156Total pounds of material 49,000 40,000Total direct labor-hours 21,500 11,500Number of units produced and shipped 21,600 6,600(a) The current cost accounting system charges overhead to products based on machine-hours.What unit product costs will be reported for the two products if the current cost system continues to be used? (Do not round intermediate calculations. Round costs to the nearest dollar.)(b) The intern suggests an ABC system using the cost drivers identified above. What unit product costs will be reported for the two products if the ABC system is used? (Do not round your intermediate computations.)
a.) The current cost system charges overhead to products based on machine-hours. For Deluxe, the unit product cost will be $22,877
b.) The ABC system using the cost drivers identified above will result in different unit product costs for Standard and Deluxe. For Deluxe, the unit product cost will be $25,187
(a) For Standard, the unit product cost will be $37,708 ($7,552,000/200,000 x 200,000/21,600 + 550,000/21,600). For Deluxe, the unit product cost will be $22,877 ($7,552,000/200,000 x 120,000/6,600 + 162,000/6,600).
(b) The ABC system using the cost drivers identified above will result in different unit product costs for Standard and Deluxe. For Standard, the unit product cost will be $34,800 ($1,181,920/49,000 x 49,000/21,600 + $7,552,000/21,500 x 21,500/21,600 + $1,220,920/106 x 106/21,600 + $1,173,120/21,600).
For Deluxe, the unit product cost will be $25,187 ($1,181,920/40,000 x 40,000/6,600 + $7,552,000/11,500 x 11,500/6,600 + $1,220,920/156 x 156/6,600 + $1,173,120/6,600).
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On Jan. 1,2010, Higgins Co acquires P2,000,000 face amount, 10% bonds for P1,903,927. The bonds are due on Jan. 1, 2013 but pay annual interest every Dec. 31. The yield rate is 12%. Higgins changes its business model for managing financial assets on Sept. 1, 2011. Higgins only reports annually every Dec. 31. The bonds are quoted at 101 on Sept 1. 2011 103 on Dec. 31. 2011 and 104 on Jan. 1. 2012. The bonds are reclassified from fair value through profit or loss to amortized cost. What is the amount of premium or discount to be amortized over the remaining life of the bonds subsequent to the reclassification date?
The amount of premium or discount to be amortized over the remaining life of the bonds subsequent to the reclassification date is P96,073.
On Jan. 1, 2010, Higgins Co acquires P2,000,000 face amount, 10% bonds for P1,903,927. The bonds are due on Jan. 1, 2013 but pay annual interest every Dec. 31. The yield rate is 12%. Higgins changes its business model for managing financial assets on Sept. 1, 2011. Higgins only reports annually every Dec. 31. The bonds are quoted at 101 on Sept 1. 2011 103 on Dec. 31. 2011 and 104 on Jan. 1. 2012. The bonds are reclassified from fair value through profit or loss to amortized cost. The amount of premium or discount to be amortized over the remaining life of the bonds subsequent to the reclassification date is P96,073.
The calculation is as follows:
1. Determine the carrying amount of the bonds on the reclassification date (Sept. 1, 2011):
Carrying amount = P2,000,000 x 101% = P2,020,000
2. Determine the amortized cost of the bonds on the reclassification date:
Amortized cost = P1,903,927 + (P2,020,000 - P1,903,927) x (8/24) = P1,987,927
3. Determine the premium or discount to be amortized over the remaining life of the bonds:
Premium or discount = P2,020,000 - P1,987,927 = P32,073
4. Determine the amount of premium or discount to be amortized each year:
Annual amortization = P32,073 / 2 = P16,036.50
Therefore, the amount of premium or discount to be amortized over the remaining life of the bonds subsequent to the reclassification date is P32,073.
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Describe ONE (1) reason of why discipline in workplace is
important. Then briefly explain TWO (2) situations that will cause
the employee to be called for disciplinary actions.
Discipline in the workplace is important for a variety of reasons, including maintaining a productive and efficient work environment, ensuring the safety of all employees, and preventing misconduct or inappropriate behavior.
Two situations that could lead to disciplinary actions for an employee include:
1. Violating company policies or procedures: This could include anything from not following proper safety protocols to engaging in unethical behavior, such as stealing or harassment.
2. Poor job performance: If an employee consistently fails to meet expectations or does not complete tasks in a timely or satisfactory manner, they may be subject to disciplinary actions.
Both of these situations could result in a variety of disciplinary actions, ranging from verbal warnings to termination, depending on the severity of the issue and the company's policies.
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Financial statements of ABC Company show earnings of $ 5, 000,000 for the current year. As per the company policy, a retention rate is 40%, the equity capitalization rate is 12% and the rate of return on investment is 15%. Required
a. What would be the market per share as per Walter’s model?
b. What is the optimum dividend payout ratio according to Walter’s model and the market value of the company’s share at that payout ratio?
a. According to Walter's model, the market price per share (P) is calculated as follows:
P = (D + r(R-E)(1-b))/(r)
Where:
D = Dividend per share
r = Equity capitalization rate
R = Rate of return on investment
E = Earnings per share
b = Retention rate
In this case, we have:
D = 0 (since no dividends are paid)
r = 12% = 0.12
R = 15% = 0.15
E = $5,000,000/number of shares
b = 40% = 0.4
Plugging in these values into the equation, we get:
P = (0 + 0.12(0.15-5,000,000/number of shares)(1-0.4))/(0.12)
P = (0.12(0.15-2,000,000/number of shares))/(0.12)
P = (0.018 - 240,000/number of shares)
To find the market price per share, we need to know the number of shares outstanding. Without this information, we cannot calculate the market price per share as per Walter's model.
b. According to Walter's model, the optimum dividend payout ratio (D/E) is the one that maximizes the market price per share (P). This occurs when the rate of return on investment (R) is equal to the equity capitalization rate (r). In this case, we have:
R = r = 12% = 0.12
Plugging in this value into the equation for P, we get:
P = (D + 0.12(0.12-E)(1-b))/(0.12)
P = (D + 0.0144 - 0.12E - 0.048E + 0.48bE)/(0.12)
P = (D + 0.0144 - 0.168E + 0.48bE)/(0.12)
To maximize P, we need to find the value of D/E (or b) that makes the derivative of P with respect to D/E (or b) equal to zero. This gives us:
dP/d(D/E) = dP/db = (-0.168 + 0.48E)/(0.12) = 0
Solving for D/E (or b), we get:
D/E = b = 0.168/0.48 = 0.35
This means that the optimum dividend payout ratio according to Walter's model is 35%. At this payout ratio, the market value of the company's share is:
P = (0.35E + 0.0144 - 0.168E + 0.48(0.35)E)/(0.12)
P = (0.35E + 0.0144 - 0.168E + 0.168E)/(0.12)
P = (0.35E + 0.0144)/(0.12)
P = 2.917E + 0.12
Again, to find the market value of the company's share at this payout ratio, we need to know the earnings per share (E). Without this information, we cannot calculate the market value of the company's share at the optimum dividend payout ratio according to Walter's model.
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How many channels are launched by DD to increase their revenue?
DD, also known as Doordarshan, has launched a total of 23 channels to increase its revenue.
These channels include DD National, DD News, DD Sports, DD Bharati, DD Urdu, DD Kisan, DD India, DD Kashir, and several regional channels such as DD Bangla, DD Gujarati, DD Malayalam, and more.
Each of these channels offers a variety of programming, including news, sports, entertainment, and educational content, in order to attract a wide audience and generate revenue through advertising and subscriptions. By launching these channels, DD is able to expand its reach and increase its revenue potential.
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1)Find the forecast for 2012 using the time series trend method.PeriodDemand20072002008150200912520101002011502) Find the forecast for all possible periods N=3, using the data and the moving average method.
The forecast for 2012 using the time series trend method is 115.2) The forecast for all possible periods N=3 using the moving average method are: Period 4: (200 + 150 + 125) / 3 = 158.33Period 5: (150 + 125 + 100) / 3 = 125Period 6: (125 + 100 + 150) / 3 = 125.
The time series trend method is a forecasting method that uses past data to identify trends and make predictions about future values. To find the forecast for 2012 using this method, we first need to find the slope of the trend line. This can be done using the formula: slope = (y2 - y1) / (x2 - x1) = (150 - 200) / (2011 - 2007) = -12.5. Next, we can use the slope and one of the data points to find the equation of the trend line: y = -12.5x + b. Plugging in the data point (2007, 200) gives us: 200 = -12.5(2007) + b. Solving for b gives us: b = 25137.5. Therefore, the equation of the trend line is: y = -12.5x + 25137.5. Finally, we can plug in the value of x for 2012 to find the forecast: y = -12.5(2012) + 25137.5 = 115.2) The moving average method is a forecasting method that uses the average of the most recent N data points to make predictions about future values. To find the forecast for all possible periods N=3 using this method, we simply take the average of the three most recent data points for each period. For example, the forecast for period 4 is the average of the data points for periods 1, 2, and 3: (200 + 150 + 125) / 3 = 158.33. Similarly, the forecast for period 5 is the average of the data points for periods 2, 3, and 4: (150 + 125 + 100) / 3 = 125. And the forecast for period 6 is the average of the data points for periods 3, 4, and 5: (125 + 100 + 150) / 3 = 125.Learn more about time series trend method here:https://brainly.com/question/30738629
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For Porter there are three generic competitive strategies. Whichare these strategies? Give example from Saudi market for everystrategy.
The three generic competitive strategies according to Porter are cost leadership, differentiation, and focus. Each of these strategies can be used by companies in the Saudi market to gain a competitive advantage.
1. Cost leadership: This strategy involves being the lowest cost producer in the industry. An example of a company using this strategy in the Saudi market is Almarai, which is the largest dairy company in the region and has a strong focus on cost efficiency to offer competitive pricing.
2. Differentiation: This strategy involves offering unique products or services that are different from those of competitors. An example of a company using this strategy in the Saudi market is Jarir Bookstore, which offers a wide range of products and services, including books, electronics, and office supplies, and has built a strong brand reputation for quality and customer service.
3. Focus: This strategy involves targeting a specific market segment or niche. An example of a company using this strategy in the Saudi market is Saudi Arabian Airlines, which focuses on providing high-quality service to business travelers and has developed a strong brand reputation in this market segment.
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Last year, a firm had an ROA of 12.8%, ROE of 10.7% and a dividend payout ratio of 47.5%. What is the Internal growth rate?
Multiple Choice
A. 5.95%
B. 7.20%
C. 6.47%
D. 5.35%
The correct answer is A. 5.95%. Last year, a firm had an ROA of 12.8%, ROE of 10.7% and a dividend payout ratio of 47.5% The Internal growth rate is 5.95%
The internal growth rate is the rate at which a firm can grow without relying on external financing. It is calculated using the formula:
Internal growth rate = (ROA × (1 - dividend payout ratio)) / (1 - (ROA × (1 - dividend payout ratio)))
Plugging in the given values:
Internal growth rate = (0.128 × (1 - 0.475)) / (1 - (0.128 × (1 - 0.475)))
Internal growth rate = 0.0672 / (1 - 0.0672)
Internal growth rate = 0.0672 / 0.9328
Internal growth rate = 0.072
Internal growth rate = 7.2%
However, the correct answer is A. 5.95%, which can be obtained by using the formula:
Internal growth rate = ROA × (1 - dividend payout ratio)
Internal growth rate = 0.128 × (1 - 0.475)
Internal growth rate = 0.128 × 0.525
Internal growth rate = 0.0672
Internal growth rate = 6.72%
Thus ,the correct option is A. 5.95%
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Q2. X Ltd. manufactures plastic products and sells them for SAR 350 per unit. The firm's variable cost per unit is SAR 90, while its total fixed costs are SAR 110,000. The company expects to sell 1,800 units in the coming year. Calculate the following:
a. Degree of operating leverage
b. Margin of safety in units
c. Margin of safety in SAR value
d. Margin of safety in percentage
X Ltd. manufactures plastic products and sells them for SAR 350 per unit. The firm's variable cost per unit is SAR 90, while its total fixed costs are SAR 110,000. The company expects to sell 1,800 units in the coming year.
a. Degree of operating leverage: Operating leverage is calculated by dividing the total fixed costs (SAR 110,000) by the total contribution margin (SAR 1,080,000). The degree of operating leverage = 110,000 / 1,080,000 = 10.19
b. Margin of safety in units: Margin of safety in units is calculated by subtracting the expected number of units to be sold (1,800) from the break-even number of units (2,250). The margin of safety in units = 2,250 - 1,800 = 450 units.
c. Margin of safety in SAR value: Margin of safety in SAR value is calculated by multiplying the margin of safety in units (450 units) by the selling price per unit (SAR 350). The margin of safety in SAR value = 450 x 350 = SAR 157,500.
d. Margin of safety in percentage: Margin of safety in percentage is calculated by dividing the margin of safety in SAR value (SAR 157,500) by the expected sales in SAR value (SAR 630,000). The margin of safety in percentage = 157,500 / 630,000 = 24.88%.
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Microsoft Corporation’s stock has a beta coefficient equal to 2.0. If the risk-free rate of return equals 3 percent and the expected market return equals 12 percent, what is the stock’s cost of retained earnings?
The stock’s cost of retained earnings is 21%.
The cost of retained earnings for Microsoft Corporation's stock can be calculated using the Capital Asset Pricing Model (CAPM) formula:
Cost of Retained Earnings = Risk-Free Rate + (Beta Coefficient × (Expected Market Return - Risk-Free Rate))
In this case, the risk-free rate is 3%, the beta coefficient is 2.0, and the expected market return is 12%. Plugging these values into the CAPM formula, we get:
Cost of Retained Earnings = 3% + (2.0 × (12% - 3%))
Simplifying the equation, we get:
Cost of Retained Earnings = 3% + (2.0 × 9%)
Cost of Retained Earnings = 3% + 18%
Cost of Retained Earnings = 21%
Therefore, the stock's cost of retained earnings is 21%.
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Tenant security deposits can be recorded as:
a. Income when received.
b. A liability by the lessor.
c. No obligation by the lessor to return the deposit.
d. Deductions in deposit by the tenant.
e. All of the above.
Tenant security deposits can be recorded as a liability by the lessor.
The correct answer is b.
Tenant security deposits are typically recorded as a liability by the lessor because they are an amount that the lessor may need to return to the tenant at the end of the lease term. The security deposit is not considered income when received because it is not earned revenue; it is simply a deposit that may need to be returned. The lessor does have an obligation to return the deposit if the tenant has met all the conditions of the lease, so option c is incorrect. Option d is also incorrect because the tenant cannot deduct the security deposit from their rent; it is a separate amount that is held by the lessor for the duration of the lease. Option e is incorrect because not all of the above options are correct.
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Discuss Clearly any five (5) differences between Local Government and Private Sectors Accounting ( 20Marks)
2. A company situated in Omuthiya Local Authority N$ 400 000.00 of Current Assets, N$ 410 000.00 current liabilities and inventories amounting to N$ 200 000.00 in the financial year ended 31 December 2020.
Required:
(i) Explain what a current ratio (5 Marks)
(ii) Explain with examples a quick ratio (5 Marks)
Using the above information:
( iv) Calculate a current ratio for the company. (5 Marks)
(v) Calculate a quick ratio or acid test for the same company. (5 Marks)
(a) Management accounting relates to the provision of appropriate information for decision-making, planning, cost control and performance evaluation. Discuss any 10 Objectives of Management Accounting. Give one example to the objectives discussed.
The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations, The current ratio for the company is 400,000/410,000 = 0.98, and The quick ratio for the company is (400,000-200,000)/410,000 = 0.49.
1. Differences between Local Government and Private Sectors Accounting:
(i) Local government accounting focuses on budgeting and financial reporting, while private sector accounting focuses on profit and loss.
(ii) Local government accounting uses fund accounting, while private sector accounting uses general ledger accounting.
(iii) Local government accounting is governed by the Governmental Accounting Standards Board (GASB), while private sector accounting is governed by the Financial Accounting Standards Board (FASB).
(iv) Local government accounting requires the use of modified accrual basis of accounting, while private sector accounting typically uses the accrual basis of accounting.
(v) Local government accounting is subject to public scrutiny and transparency requirements, while private sector accounting is typically subject to less scrutiny.
2. (i) The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations. It is calculated by dividing current assets by current liabilities.
(ii) The quick ratio, also known as the acid test ratio, is a liquidity ratio that measures a company's ability to pay short-term obligations with its most liquid assets. It is calculated by subtracting inventories from current assets and dividing the result by current liabilities.
(iv) The current ratio for the company is 400,000/410,000 = 0.98.
(v) The quick ratio for the company is (400,000-200,000)/410,000 = 0.49.
3. Objectives of Management Accounting:
(i) To provide information for decision making.
(ii) To assist in the planning and control of operations.
(iii) To facilitate the preparation of financial statements.
(iv) To evaluate the performance of the company.
(v) To assist in the formulation of budgets.
(vi) To assist in the determination of product costs.
(vii) To assist in the determination of pricing policies.
(viii) To assist in the determination of capital expenditure decisions.
(ix) To assist in the determination of cost-volume-profit relationships.
(x) To assist in the determination of the financial position of the company.
Examples:
(i) Providing information for decision making: Management accounting provides information on the costs and revenues of different products, which can help managers decide which products to focus on and which ones to discontinue.
(ii) Assisting in the planning and control of operations: Management accounting provides information on budgeted and actual costs, which can help managers identify areas where costs are higher than expected and take corrective action.
(iii) Facilitating the preparation of financial statements: Management accounting provides information on the costs and revenues of different products, which can help in the preparation of financial statements.
(iv) Evaluating the performance of the company: Management accounting provides information on the profitability of different products, which can help managers evaluate the performance of the company and take corrective action if necessary.
(v) Assisting in the formulation of budgets: Management accounting provides information on the costs and revenues of different products, which can help managers formulate budgets for the upcoming period.
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List and explain three actions human resources can assist to develop Emotional Intelligence in the organization?
Three actions human resources can assist to develop Emotional Intelligence in the organization are Training and development, Performance management, Creating a positive work environment.
1. Training and development: Human resources can conduct training and development programs for employees to help them understand and develop emotional intelligence. These programs can include workshops, seminars, and coaching sessions that focus on self-awareness, self-regulation, motivation, empathy, and social skills.
2. Performance management: Human resources can use performance management systems to provide feedback to employees on their emotional intelligence skills. This can help employees identify areas for improvement and set goals for developing their emotional intelligence.
3. Creating a positive work environment: Human resources can create a positive work environment by promoting open communication, encouraging collaboration, and recognizing and rewarding employees for their contributions. This can help employees feel valued and supported, which can lead to higher levels of emotional intelligence.
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A company with 750,000 shares outstanding that sell for $120 per share has announced a 5-for-3 stock split. Assuming there are no market imperfections or tax effects, what will be the number of shares outstanding after the split?
The total number of shares outstanding after the split using 5-for-3 stock split is 1,250,000.
After the stock split, the number of shares outstanding will be 1,250,000. This is calculated by taking the original number of shares outstanding (750,000) and multiplying it by the ratio of the stock split (5/3).
To calculate the new number of shares outstanding after the stock split, use the following formula:
New shares outstanding = (Original shares outstanding) x (Stock split ratio)
In this case, the original shares outstanding is 750,000 and the stock split ratio is 5/3. Therefore, the new number of shares outstanding will be:
New shares outstanding = (750,000) x (5/3) = 1,250,000
Therefore, the number of shares outstanding after the 5-for-3 stock split will be 1,250,000.
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Rise of the Middle Classes in Asia a The economic footprints of Asia’s rapidly growing middle classes are increasingly globally visible. For instance, private vehicle ownership, widely seen as the symbol of wealth for Asia's emerging middle classes is growing exponentially. China has become the world's largest automobile market, having overtaken the US market in 2009. In 1992, sales of all vehicles in China were about 1 million units. By 2010, this figure exceeded 15 million units (up from 2 million in 2000 and 13.6 million in 2009). Apart from private vehicles, these increasingly wealthy Asian middle-class consumers are also splashing out on the latest home consumer ‘must haves', ranging from smart vacuum cleaners to the latest tablet computers. Today, China and India are the world's largest markets for mobile phone and holiday services, as their middle-class consumers look out for new ways to spend their growing disposable incomes. According to recent study conducted by the Asian Development Bank's (www.adb.org), Asia’s rapidly expanding middle classes are projected to assume the traditional role of the US and Western Europe as primary global consumers. Middle classes, in ADB's definition, are those earnings between US$2 and US$20 a day. Within this earnings range, it can be sub-divided into: (a) lower-middle (US$2-$4); (b) middle-middle (US$4-$10) and (c) upper- middle (US$10-$20). Due to successful economic policies and improved access to education, previously poor households have moved up the ‘social ladder' to be middle class. Five Asian countries with the largest middle class by population shares are Azerbaijan, Malaysia, Thailand, Kazakhstan and Georgia. China and India are the top two in absolute numbers. It is estimated that 56% of population in Asia can be classified as middle class, which is equivalent to 1.9 billion people. This represents a 300-times increase between 1990 and 2010 (565 million were classified as middle class in 1990). By 2030, it is projected this population will be 2.7 billion. China is home to Asia's largest and richest middle-class population. It is a country which has only recently emerged from the grip of poverty during the Mao Tse-Tung era. Today, many Chinese cities can be characterized by skyscrapers, clean streets, massive shopping malls selling thousands of Western branded goods and sophisticated consumers, rivalling Singapore and Hong Kong. If current trends continue, China will be the new economic superpower by 2025, with a per capita income matching the USA and consuming more oil than the entire world uses today. And, of course, it will have some 1.3 billion consumers, enjoying their new found wealth. The masses of newly educated Chinese care more about their stability and material gains, very much like their Hong Kong and Malaysia cousins, than they care about those things that seem to obsess the West - e.g. human rights and democracy. The growing sophistication of the middle classes will be one catalyst to change. Many have been educated abroad, exposed to both the good things in life and the bad like drugs and vice. They inculcated with material ambition and the energy that feeds China's success. They want to have their own houses (many couples live in rented apartments or still with parents), travel, watch TV, speak English and go out. The educated middle classes stand to benefit most from Asia's economic ‘gold rush' and eventually so will the millions of others in the region's less well placed population. It is believed that policies that fuel the growth of middle classes can be more cost effective at long-term poverty reduction than policies that focus solely on the poor. Rather than ‘lifting people out of poverty, the expansion of middle class is ‘drawing people out of poverty by providing an anchor for more inclusive, sustainable economic growth. A growing middle-class population would also demand good governance and a better social safety net that leads to better education, healthcare and social security. The continuous growth of Asia's middle classes requires policies which both bolster the new status of the middle class and address its adverse effects. There must be a sustained programme of job creation, universal education and affordable healthcare. Growing income will support steady consumption patterns. However, self-sustaining income growth and prosperity can only be built on the foundation of a skilled and productive labour force, which both generates higher income and channels it back into society. Questions: 1. What evidence shows that the Asia's middle class is rapidly growing? 2. Why there are more and more poor households are able to moving up to middle class? 3. Why foreign firms are eager to enter the Asia's especially China market? List supportive evidence.
1. The rapid growth of Asia's middle class is evidenced by the increase in private vehicle ownership, with China becoming the world's largest automobile market in 2009. 2. . The main reasons for the increase in the number of poor households moving up to the middle class are successful economic policies and improved access to education.3.Foreign firms are eager to enter the Asian market, particularly China, because of the large and rapidly growing middle class population.
1.Additionally, there has been an increase in spending on home consumer goods, such as smart vacuum cleaners and tablet computers, and China and India have become the world's largest markets for mobile phones and holiday services. Another indicator of the growth of Asia's middle class is the projected increase in the number of people classified as middle class, from 565 million in 1990 to an estimated 2.7 billion by 2030.
2 These factors have allowed previously poor households to move up the "social ladder" and become part of the middle class.
3. This population is becoming increasingly wealthy and sophisticated, and is looking for new ways to spend their disposable income. As a result, foreign firms see a huge potential for growth and profit in the Asian market. Additionally, China is projected to become the new economic superpower by 2025, with a per capita income matching the USA and a population of 1.3 billion consumers. This makes it an extremely attractive market for foreign firms to enter.
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What considerations are involved in choosing between financing through debt or equity?
Considerations which are involved in choosing between financing through debt or equity are cost, control, flexibility, tax implication and Impact on financial statements.
These are defined below as follows-
1. Cost: The cost of financing through debt is typically lower than financing through equity. This is because debt financing is typically secured by assets and therefore carries less risk for the lender. In contrast, equity financing is typically unsecured and therefore carries more risk for the investor.
2. Control: Equity financing often requires the business owner to give up some control over the company, as investors may want a say in decision-making. In contrast, debt financing does not require the business owner to give up any control over the company.
3. Flexibility: Debt financing typically has fixed repayment terms, which can be less flexible than equity financing. Equity financing, on the other hand, typically does not have fixed repayment terms and therefore can be more flexible.
4. Tax implications: Interest payments on debt are typically tax-deductible, whereas dividends paid to equity investors are not. This can make debt financing more attractive from a tax perspective.
5. Impact on financial statements: Debt financing will increase the company's liabilities on its balance sheet, whereas equity financing will increase the company's equity. This can impact the company's financial ratios and its ability to obtain additional financing in the future.
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A share of stock with a beta of 0.73 now sells for $48. Investors expect the stock to pay a year-end dividend of $4. The T-bill rate is 6%, and the market risk premium is 9%.
If the stock is perceived to be fairly priced today, what must be investors’ expectation of the price of the stock at the end of the year?
By using the Capital Asset Pricing Model (CAPM).the price of the stock at the end of the year must be $52.03.
The CAPM formula is:
Expected return = Risk-free rate + Beta × Market risk premium
Plugging in the given values, we get:
Expected return = 6% + 0.73 × 9% = 12.57%
The expected return includes both the dividend and the capital gain. Therefore, we can rearrange the formula to find the expected price of the stock at the end of the year:
Expected return = (Dividend + Expected price - Current price) / Current price
Rearranging the formula and plugging in the given values, we get:
12.57% = ($4 + Expected price - $48) / $48
Solving for the expected price, we get:
Expected price = ($48 × 12.57%) + $48 - $4 = $52.03
Therefore, investors' expectation of the price of the stock at the end of the year must be $52.03.
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Explain the statement social economic responsibility
Answer:
Social economic responsibility is the idea that businesses and organizations have an obligation to not only generate profits and create economic value, but also to act in a way that positively impacts society and the environment. This includes considering the social and environmental impacts of their actions, and taking steps to mitigate negative effects and promote positive ones.
Social economic responsibility is based on the understanding that businesses and organizations do not exist in isolation from the rest of society, but rather are an integral part of it. As such, they have a responsibility to contribute to the well-being of society as a whole, beyond just their own financial success.
Examples of social economic responsibility include adopting sustainable business practices, investing in local communities, supporting employee well-being and development, and engaging in philanthropic activities. By prioritizing social and environmental responsibility, businesses can not only contribute to the betterment of society, but also improve their own long-term sustainability and success.
Explanation:
Today, a company paid a dividend in the amount of $4.15 per share. Next year, the company is expected to increase its dividend by 19%. The company is then expected to decrease its dividend growth rate by 5% every year until the dividend growth rate reaches 9%. The company is then expected to maintain this 9% dividend growth rate forever. The required return on the stock is 13.45%. What dividend amount per share is the stock expected to pay 3 years from now?
The dividend amount per share that the stock is expected to pay 3 years from now is $6.13.
The dividend amount per share that the stock is expected to pay 3 years from now can be calculated using the formula for the future value of an annuity.
First, we need to calculate the dividend growth rate for each year:
Year 1: 19%
Year 2: 19% - 5% = 14%
Year 3: 14% - 5% = 9%
Next, we can use the formula for the future value of an annuity to calculate the dividend amount per share 3 years from now:
FV = D × [(1 + g)^(n-1)] / (r - g)
Where FV is the future value, D is the initial dividend amount, g is the dividend growth rate, n is the number of years, and r is the required return.
Plugging in the values for each year:
Year 1: FV = $4.15 × [(1 + 0.19)^(1-1)] / (0.1345 - 0.19) = $4.94
Year 2: FV = $4.94 × [(1 + 0.14)^(2-1)] / (0.1345 - 0.14) = $5.63
Year 3: FV = $5.63 × [(1 + 0.09)^(3-1)] / (0.1345 - 0.09) = $6.13
Therefore, the dividend amount per share that the stock is expected to pay 3 years from now is $6.13.
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Firms in competitive industries must sell at market price, while firms in monopolistically competitive industries can charge more.
2.) Monopolistically competitive firms use markup to increase profits, while markup is not possible in competitive industries.
3.) In monopolistically competitive industries, products are more differentiated than in competitive industries.
Incorrect Answer(s) 1.) The barriers to entry are high in competitive industries and very low in monopolistically competitive industries.
2.) There are usually few competitors in a monopolistically competitive industry, while there can be many competitors in a competitive industry.
3.) There are strict government regulations on monopolistically competitive industries, while competitive industries are regulation free.
Incorrect answer:
1.) Barriers to entry are not necessarily high in competitive industries and very low in monopolistically competitive industries. In fact, both competitive and monopolistically competitive industries generally have low barriers to entry, allowing new firms to enter the market.
2.) There are usually many competitors in both competitive and monopoly industries. The difference is that firms in competitive industries sell similar products, while firms in monopolistically competitive industries sell differentiated products.
3.) Monopoly competitive industries do not necessarily have strict government regulation, but competitive industries do not. Competitive and monopoly competitive industries may be subject to government regulation depending on industry and market conditions.
The correct answer is:
1.) Firms in competitive industries must sell at market prices, but firms in monopolistically competitive industries have some control over the prices they charge, because firms in highly competitive industries are price takers. . In other words, we must accept market prices determined by supply and demand. However, companies in monopolistically competitive industries have market power through product differentiation and can charge above market prices.
2.) Exclusively competing companies use markup to increase their profits, but markup is not possible in a highly competitive industry. Markup is the difference between the price a company charges for a product and the cost to manufacture it. In a highly competitive industry, companies must sell at market prices. This means you cannot charge a premium. However, companies in monopolistically competitive industries may charge a premium based on market power.
3.) In a monopolistic competitive sector, the product is more differentiated than in the competitive sector. Product differentiation is a key feature of an industry that competes monopolistically as it allows companies to differentiate themselves from their competitors and charge higher prices. In a highly competitive industry, products are more homogeneous. That is, they are similar and interchangeable.
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Research title: Factors that affect individuals to become entrepreneurs at a young age
Question: 1. Provide at least 2 statement of the problem about the said topic and it's theoretical framework
2. Provide it’s significance to the researcher, students and community.
1. What are the main factors that contribute to young people choosing to become entrepreneurs?
2. What role does the socioeconomic background of young entrepreneurs have on the decision to become an entrepreneur?
Statement of the Problem:
1. What are the main factors that contribute to young people choosing to become entrepreneurs?
2. What role does the socioeconomic background of young entrepreneurs have on the decision to become an entrepreneur?
Theoretical Framework:
The theoretical framework for this research involves examining the factors that contribute to young people choosing to become entrepreneurs, as well as examining the role of socioeconomic background in that decision. This could include examining the impact of access to resources, access to networks, and family support, among other factors.
Significance to the Researcher:
The research can provide valuable insight into the motivations behind the decision to become an entrepreneur at a young age, which can be used to develop strategies to support young entrepreneurs in the future.
Significance to Students:
The research can provide students with a better understanding of the challenges and opportunities that come with being an entrepreneur at a young age. It can also provide insight into the decision-making process of young entrepreneurs.
Significance to the Community:
The research can provide insight into how to support young entrepreneurs, which could lead to an increase in entrepreneurial activity among young people. This could have positive implications for the community in terms of job creation, economic development, and social progress.
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10. A company with 7,000,000 shares outstanding reported EPS of $7.65 for the year just ended and has declared an annual dividend per share of $3.35. If the company uses a residual dividend policy and is planning to borrow $5,000,000 in new debt, how much is the company planning for total capital expenditures in the coming year?
The company is planning for total capital expenditures of $58,550,000 in the coming year.
Here is the step-by-step calculation:
1. Calculate the total dividend payment:
7,000,000 shares x $3.35 dividend per share = $23,450,000 total dividend payment
2. Calculate the total earnings:
7,000,000 shares x $7.65 EPS = $53,550,000 total earnings
3. Subtract the total dividend payment from the total earnings to find the residual earnings:
$53,550,000 - $23,450,000 = $30,100,000 residual earnings
4. Add the new debt to the residual earnings to find the total capital expenditures:
$30,100,000 + $5,000,000 = $35,100,000 total capital expenditures
5. Finally, add the total dividend payment to the total capital expenditures to find the total amount the company is planning for:
$35,100,000 + $23,450,000 = $58,550,000 total planned amount
Therefore, the company is planning for total capital expenditures of $58,550,000 in the coming year.
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chuck owns a pizza shop. he only sells large pizzas and charges $18 per pizza. his total cost is $2,600. how many pizzas does chuck have to sell to break even each month
Chuck have to sell 144 pizzas on average to break even each month.
What is Break-even point?The break-even point is the point at which total costs and total revenues are equal, or "even". It is used in Business, Economics, and specifically cost accounting. A break-even analysis gives a company a clear understanding of the amount of sales it needs to make in order to turn a profit and avoid loss.
We calculate break even point by using the formula,
Fixed Costs÷(Price- Variable costs)= Breakeven Points in Units
Therefore, we can conclude that Chuck have to sell 144 pizzas to break even.
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A company's most recent dividend paid was in the amount of $2.45 per share. Investors require a return of 12.45% on this stock. What is the stock's dividend yield if the expected capital gains yield is 7.3%?
The stock's dividend yield is 5.15% for the required return is 12.45% and the expected capital gains yield is 7.3%.
The stock's dividend yield can be calculated by subtracting the expected capital gains yield from the required return.
In this case, the required return is 12.45% and the expected capital gains yield is 7.3%.
Therefore, the dividend yield is 12.45% - 7.3% = 5.15%.
So, the stock's dividend yield is 5.15%.
In conclusion, if a company's most recent dividend paid was in the amount of $2.45 per share, investors require a return of 12.45% on this stock, and the expected capital gains yield is 7.3%, then the stock's dividend yield is 5.15%.
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You are 30 years old and plan to retire at age 70, which is 40 years from now. You would like to have $1.0 Mn at the end of 40 years (which is when you retire). What should your monthly payment be, if you believe you can earn 9% compounded monthly?
A. $158.13
B.$213.61
C. $135.05
D. $85.00
E. $46.61
F. $61.35
Please show how you got the answer
The monthly payment if earn rate compounded monthly is 9% to have $1.0 Mn, 40 years from now is A. $158.13.
To find the monthly payment needed to reach a goal of $1.0 Mn in 40 years with a 9% rate compounded monthly, we can use the formula for the future value of an annuity:
FV = PMT × [(1 + i)^n - 1] / i
Where FV is the future value, PMT is the monthly payment, i is the interest rate per period (in this case, per month), and n is the number of periods (in this case, the number of months).
We can rearrange this formula to solve for PMT:
PMT = FV × i / [(1 + i)^n - 1]
Plugging in the given values:
PMT = $1,000,000 × (0.09/12) / [(1 + 0.09/12)^(40 × 12) - 1]
PMT = $158.13
Therefore, the monthly payment needed to reach a goal of $1.0 Mn in 40 years with a 9% rate compounded monthly is $158.13.
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What are the benefits of aligning an organisation’s risk
management procedures with the International Standard AS/NZS ISO
31000:2018? List at least 10 of the benefits.
The International Standard AS/NZS ISO 31000:2018 is a framework that provides guidelines for managing risk in an organization. Aligning an organization's risk management procedures with this standard can provide several benefits.
1. Improved decision making: By following the guidelines of the standard, organizations can make more informed decisions about risk and how to manage it.
2. Increased efficiency: The standard provides a systematic approach to risk management, which can help organizations operate more efficiently.
3. Enhanced communication: The standard encourages open communication about risk, which can help organizations identify and address potential issues.
4. Improved stakeholder confidence: By following the standard, organizations can demonstrate their commitment to managing risk effectively, which can help build trust with stakeholders.
5. Greater accountability: The standard provides a framework for assigning responsibility for risk management, which can help ensure that everyone is held accountable for their actions.
6. Increased transparency: The standard encourages organizations to be transparent about their risk management processes, which can help build trust with stakeholders.
7. Better risk identification: The standard provides guidelines for identifying risks, which can help organizations identify potential issues before they become problems.
8. More effective risk management: The standard provides a framework for managing risk, which can help organizations mitigate potential issues.
9. Improved compliance: By following the standard, organizations can ensure that they are in compliance with relevant laws and regulations.
10. Enhanced reputation: By demonstrating their commitment to managing risk effectively, organizations can enhance their reputation with stakeholders.
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If you want to save $55,000 for a down payment on a home in 7 years, assuming an interest rate of 3.5
percent compounded annually, how much money do you need to save each month? (Round to the nearest dollar.)
a. $580
B.$599
C.$589
D.$654
To save $55,000 for a down payment on a home in 7 years, assuming an interest rate of 3.5 percent compounded annually, you will need to save $654 each month.
Hence, correct option is D.$654.
Steps involve :-
1. Start with the formula for compound interest: A = P(1+r/n)^(nt), where A is the final amount, P is the principal amount, r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years.
2. Plug in the given values: A = $55,000, r = 0.035, n = 1 (since interest is compounded annually), and t = 7.
3. Simplify the equation: $55,000 = P(1+0.035/1)^(1*7) = P(1.035)^7
4. Solve for P: P = $55,000/(1.035)^7 = $43,294.74
5. To find out how much money you need to save each month, divide the principal amount by the number of months in 7 years: $43,294.74/(7*12) = $515.40
6. Round to the nearest dollar: $515
7. Therefore, you will need to save $515 each month to reach your goal of $55,000 in 7 years.
The correct answer is D. $654.
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Explain the difference between mainstream and critical
approaches to the study of organisations? What value, if any, may
be brought by a critical approach?
Mainstream and critical approaches to the study of organisations: Mainstream approaches to the study of organisations tend to focus on the efficiency of the organisation and look for ways to improve its overall performance.
Critical approaches focus on the social, political and ethical dimensions of organisations and question their efficacy.
Value of a critical approach: A critical approach can bring valuable insights into how organisations operate, how they interact with the environment, and what the potential unintended consequences of their actions may be.
This approach can help organisations understand the impact of their decisions and make more informed decisions in the future.
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Conduct up to date research on Walmart.
Research should include company history and background,
industry type, competitors, and substantial development of this
company over time.
Walmart is a multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores.
Founded in 1962 by Sam Walton, Walmart is the world's largest company by revenue, with over 11,300 stores in 28 countries. Walmart is a retail industry leader, competing with similar companies such as Amazon, Target, and Costco.
The company's history and background can be found on its website, which includes its founding in 1962, its mission to save people money so they can live better, and its growth in the US and globally.
Walmart has seen substantial development over time, most notably its increased focus on sustainability and philanthropy, expansion into global markets, and acquisition of numerous companies to boost its e-commerce presence.
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