Answer:
The anwers are equity, a claim to partial owernship, van and other bod holders , higher.
Explanation:
Suppose Van would like to invest $2,000 of his savings.
One way of investing is to purchase stock or bonds from a private company.
Suppose RoboTroid, a robotics firm, is selling bonds to raise money for a new lab—a practice known as ___equity____ (Debt or equity) finance. Buying a bond issued by RoboTroid would give Van _____a claim to partial ownership____ (An IOU, a promise pay, from or a claim to partial ownership) the firm. In the event that RoboTroid runs into financial difficulty, _van and other bondholders______________ (Van and other bondholders or the stockholders) will be paid first.
Assuming that everything else is equal, a U.S. government bond that matures 10 years from now most likely pays a ___higher_______ (higher or lower) interest rate than a U.S. government bond that matures 30 years from now.
Gary invested $1,000 in large U.S. stocks. This investment earned 15.05 percent in 2012, 33.35 percent in 2013, 11.50 percent in 2014, and 2.10 percent in 2015. What return did he earn in the average year during the 2012–2015 period?
Answer:
The answer is: Average return Gary earned is 14.97%.
Explanation:
Please find the below for detailed explanation and calculations:
The total increase of Gary's investment in large U.S. stocks from 2012 to 2015 is calculated as : (1+15.05%) x (1+33.35%) x (1+11.50%) + (1+ 2.10%) = 1.747 times. That is, he will get 1,000 x 1.747 = $1,747 at the end of 2015.
The average return of Gary's investment in large U.S. stocks from 2012 to 2015 ( 4 year period) is: [ (The fourth root of 1.747) - 1] x 100% =14.97%.
_____, a type of transit advertising, are printed on high-grade cardboard and often varnished for weather resistance. They are most widely used on the side, rear, and front of a bus.
Answer: Outside Posters
Explanation:
OUTSIDE POSTERS is a type of transit advertising, that are printed on high-grade cardboard and often varnished for weather resistance. They are most widely used on the side, rear, and front of a bus.
The outside posters are well suited for external use and are easy to see as the characters of the write up are very visible. The outside posters are targeted at the consumers of the product as they are on their daily move.
Which bidding strategy works to hit your desired CPA and allows you to achieve more conversions at a stronger ROI without manual optimization?
A. Target cost-per-lead (tCPL)
B. Target cost-per-view (eCPV)
C. Target cost-per-click (CPC)
D. Target-cost-per-acquisition (tCPA)
Answer: Option D
Explanation: In simple words, it refers to a smarty bidding strategy which is provided by the portal of google ads and it helps the campaigner to optimize the bids so he she can enjoy maximum conversions for target cost per acquisition that they have set for their campaign.
It was earlier known as conversion optimizer as it provides maximum options to the user with respect to conversion. Thus, we can conclude that the correct option is D.
In a purely competitive market, a firm finds that at its MR=MC output level the Total Variable Cost (TVC) equals $550, Total Fixed Cost (TFC) equals $250, and Total Revenue equals $700. The firm should___________.
a. produce because it will realize an economic profit.
b. produce because it can still cover its total costs.
c. shut down in the short run.
Answer:
The correct option is B
Explanation:
A pure competition is describes as a market which has a wider range of competitors, those are selling the same kind of products.
A purely competitive market involves or comprise of the large or huge numbers of the firms who are making the standardized product, the market prices are determined by the demand of consumer.
In this case, MR is equal to MC, TVC is $550, Total revenue is $250 and TFC is $250. So, the firm have a scope for producing as it could still cover the total cost.
The cash flows associated with common stock are more difficult to estimate than those related to bonds because the stock has a residual claim against the company versus a contractual obligation for a bond. True or False?
Answer:
The answer is True.
Explanation:
Common stock holders is the firm's owner. Unless their voting rights is large enough, they will not have the power to demand certain dividend amount be paid out every year as it is at the firm's board of management authority. Moreover, common stock has perpetual lifetime which only ends when the company shut down and has residual claim against the company, thus, the recovery of initial investment in common stock is harder to estimate as it is usually the stock's price at exit time.
For bond, it is a contractual obligation, thus interest payment and face value repayment have been stated very clear in amount and in time and these payments are put into priority over common stock in the event of default.
The statement is true because stock cash flows are unpredictable due to the lack of fixed dividends and the variability in future company profits, making them more difficult to estimate compared to the fixed payments of bonds.
Explanation:The statement that cash flows associated with common stock are more difficult to estimate than those related to bonds is true. Unlike bonds, which have contractual obligations that define the interest and principal payments, common stock represents a residual claim on the company's assets and profits. This means that stockholders are entitled to profits only after all other claims, such as debts, have been satisfied. The uncertainty in a company's future profits and the absence of fixed dividends make estimating stock cash flows more challenging.
Investors in common stock face both the uncertainty of the company's future profitability and management decisions affecting dividend policies. Moreover, they must consider potential capital gains from the sale of the stock in the future. Because of the variables involved in predicting a company's performance, including demand for its products and cost controls, stock prices represent investors' estimates of future profits and may fluctuate significantly.
At the BMW plant in Spartanburg, South Carolina, rather than use a typical order-to-delivery process, it has suppliers deliver parts every four hours when the plant is in operation. BMW uses a ________ inventory control system.
Answer: JIT
Explanation:
The JIT inventory control system is one of the type of management strategy that hold the sufficient inventories for maximize the demand of the market.
The JIT inventory control system is also known as time inventory as it overall reduce the inventory amount in the business.
The main purpose of using the JIT inventory control system is that it improve the quality and productivity. This system is the the most cost-effective technique for holing the stocks.
Therefore, JIT is the correct answer.
"Under MM Proposition II, a firm's cost of equity capital is ______ related to the firm's debt-equity ratio provided the cost of capital for an all-equity firm exceeds the cost of debt."
Answer:
Directly
Explanation:
The cost of equity is directly related to a company's debt to equity ratio.
As the use of debt increases, the cost of equity increases to maintain a constant weighted average cost of capital.
Hale Company sells merchandise on account for $1,000 to Long Company with credit terms of 2/10, n/30. Long Company returns $200 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?a. $784b. $780c. $980d. $800
Answer:
Amount of Check = $784
so correct option is a. $784
Explanation:
given data
Merchandise on account = $1,000
Long Company returns = $200
credit terms = 2/10
n/30
to find out
What is the amount of the check
solution
we know here that Total Merchandise will be
Total Merchandise = Merchandise on account - returns ....................1
Total Merchandise = $1000 - $200
Total Merchandise = $800
and
discount will be here
Discount = 0.02 × 800
returns = $16
so
Amount of Check will be as
Amount of Check = Total Merchandise - Discount ...................2
put here value
Amount of Check = Total Merchandise - Discount
Amount of Check = $800 - $16
Amount of Check = $784
so correct option is a. $784
Which of the following situations might convince an employer to choose a nonqualified retirement plan over a qualified profit-sharing plan?
A) The employer, a closely held C Corporation, is in the 15% income tax bracket and the sole owner of the employer is in the 35% income tax bracket.
B) The employer only wants to meet the organization's objectives of attracting executives, retaining executives, and providing for a graceful transition in company leadership.
C) The employer is not concerned with providing retirement benefits to the rank and file employees.
D) The employer is not willing to pay high administrative costs.
E) All of the above.
Answer:
All the options might convince to an employer to choose a nonqualified retirement plan over a quialified plan.
en A). the owner of the corporation would use a nonqualified plan because the income tax rate of the business is lower than the owner´s tax rate.
B) Is a true statement. as nonqualified plans are typycally only stablised to benefit the executive and there are no requirements to benefit thr rank and file
C)
would cause an employer to choose a nonqualified plan because a nonqualified plan requires less administrative costs than a profit sharing plan
Suppose a tax of $4 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units. The tax decreases consumer surplus by $3,000 and decreases producer surplus by $4,400. The deadweight loss of the tax is
a. $200.
b. $400.
c. $600.
d. $1,200.
Answer:
option (c) $600
Explanation:
Given:
Tax = $4 per unit
Initial equilibrium quantity = 2,000 units
Final equilibrium quantity = 1,700 units
Decrease in consumer surplus = $3,000
Decrease in consumer surplus = $4,400
Now,
Deadweight Loss is calculated using the formula:
Deadweight loss
= [tex]\frac{1}{2}[/tex] × Tax × (Original equilibrium quantity - New equilibrium quantity)
on substituting the respective values, we get
Deadweight loss = [tex]\frac{1}{2}[/tex] × 4 × (2,000 - 1,700)
or
Deadweight loss = 2 × (3) = $600
Hence,
the correct answer is option (c) $600
The deadweight loss of the tax is $600. The correct answer is option c. $600.
Step 1
The deadweight loss (DWL) of a tax is the loss of economic efficiency that occurs when the tax causes the equilibrium quantity of a good to be reduced. The DWL can be calculated using the formula for the area of a triangle:
[tex]\[ \text{DWL} = \frac{1}{2} \times \text{Tax per unit} \times \text{Reduction in quantity} \][/tex]
Given:
- Tax per unit: $4
- Reduction in quantity: [tex]\( 2,000 - 1,700 = 300 \)[/tex]
Step 2
Calculation:
[tex]\[ \text{DWL} = \frac{1}{2} \times 4 \times 300 \][/tex]
[tex]\[ \text{DWL} = \frac{1}{2} \times 1,200 \][/tex]
[tex]\[ \text{DWL} = 600 \][/tex]
The deadweight loss represents the lost economic welfare due to the tax. It is calculated as half the product of the tax per unit and the reduction in the equilibrium quantity of the good. This calculation accounts for the area of the triangle formed by the reduction in quantity and the tax imposed.
A company wants to determine its reorder point (R). Demand is variable and the company wants to build a safety stock into R. If the average daily demand is 12, the lead time is 5 days, the desired z value is 1.96, and the standard deviation of usage during lead time is 3, which of the following is the desired value of R?
Answer:
66 units
Explanation:
Now lets do it part by part shall we,
(12 x 5) + (3 x 1.96)
12 x 5 = 60
3 x 1.96 = 5.88
Now to add it all up
60 + 5.88 = 65.88 = 66
The reorder point (R) is calculated using the formula R = Average daily demand x Lead time + Desired z value x Standard deviation of usage during lead time. Given an average daily demand of 12, a lead time of 5 days, a desired z value of 1.96, and a standard deviation of usage during lead time of 3, the reorder point equals about 66 units when rounded up to the nearest whole number.
Explanation:The reorder point (R) of a company is calculated when the average daily demand, the lead time, the desired z value, and the standard deviation of usage during the lead time are known. The formula to calculate this is:
R = (Average daily demand x Lead time) + (Desired z value x Standard deviation of usage during lead time)
Using the values given: R = (12 units/day x 5 days) + (1.96 z value x 3 units) = 60 units + 5.88 units = 65.88 units
Therefore, the company's desired reorder point (R), including a safety stock, would approximately be 66 units when rounded up to the nearest whole number.
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Customer Insights, Inc. operates a facility that recruits 8 to 10 consumers and screens them on criteria such as relevance to the target segment or usage in a product category. What type of research is Customer Insights, Inc. engaging in?A. focus groupsB. copy testingC. online surveysD. sampling
Answer:
A) Focus groups
Explanation:
A focus group is a specific type of sample. The population sampled is not randomly selected, but conveniently selected. This means, that the participants of the focus group are picked specifically for qualities that the company seeks to evaluate.
In this example, the focus group size ranges from 8 to 10 participants, and each participant is selected depending on whether he or she has a relevant charateristic related to the target market or not.
For example, if the company sells golf clubs, the focus group will probably skew male, older, higher income, and most importantly: golf enthusiast.
If your content is focused on the different solutions to your buyer persona’s problem, where would that content fit into the buyer’s journey?A. AwarenessB. ConsiderationC. DecisionD. All of the above
Answer:
The answer is letter B
Explanation:
It would fit into the Consideration.
If the actual budget deficit is $260 billion, the economy is operating $600 billion above its potential, and the marginal tax rate is 17 percent, what are the structural deficit or surplus and the cyclical deficit or surplus?
Answer:
structural deficit = $362 billioncyclical surplus = $102 billionExplanation:
In order to calculate the structural deficit we have to solve the following equation:
structural deficit = actual deficit + (economy's operating level above potential x marginal tax rate) = $260 billion + ($600 billion x 17%) = $260 billion + $102 billion = $362 billion
The cyclical surplus is calculated by multiplying the economy's operating level above potential times marginal tax rate = $600 billion x 17% = $102 billion
Which statement about advertising’s characteristics is correct?
a. Advertising seeks to appeal to a mass audience with a uniform message.
b. None of the statements are true
c. Advertising has high flexibility but low control over placement or content.
d. Advertising has no formal sponsor.
e. Advertising has the highest message credibility of any of the types of promotion.
Answer: Advertising seeks to appeal to a mass audience with a uniform message.
Explanation: Advertising involves creating awareness about a product or service to the public through the various channels of communication.
Advertising aims at getting across a message of a product to its target customers via the various channels of communication such as: social media, T.V, radio etc.
W. L. Gore is the company that created Gore-Tex among many other innovative products. W.L.Gore employees (known as associates) don’t have titles or bosses in the traditional sense. Instead, associates make commitments to work on projects that they believe are most worthy of their time. At W.L. Gore, few leaders are appointed; leaders simply emerge as needed by the other employees or the project itself. The Gore company more than likely adheres to the ____ theory of leadership.
a.Contingency
b.Normative
c.Strategic
d.Trait
e.Visionary
Answer:
a.Contingency
Explanation:
The Contingency theory of leadership is a theory that establishes that a leader is successful when the style used fits the situation. This theory states that the best leadership style is the one that best adapts to the context. So, the Gore company more than likely adheres to the contingency theory of leadership because their leaders are not chosen but emerge according to the project they are working on and by other employees.
The Gore company more than likely adheres to the Contingency theory of leadership. Hence the correct option is a.
W.L. Gore's approach to leadership aligns with the contingency theory. This theory emphasizes that effective leadership is contingent upon various factors, such as the specific situation, the nature of the task, and the characteristics of the followers. In the case of W.L. Gore, the absence of traditional titles and bosses reflects a flexible and situational leadership model.
Associates at Gore make commitments to projects based on their perceived value and relevance rather than following a predetermined hierarchical structure. This flexible and adaptive leadership approach allows leaders to emerge organically as needed, adapting to the dynamic nature of projects and employee expertise. The contingency theory recognizes the importance of tailoring leadership styles to fit the specific context and needs of the organization, which is evident in W.L. Gore's unique leadership philosophy. Hence the correct option is a.
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The role making phase of development is a two-way exchange between the boss and the subordinate and is characterized by negotiation.a. true.b. false.
Answer:
True
Explanation:
Role making is developing a trust in between the manager and that of a new employee or team member. This basically moves in the direction that the manager expects the new employee to perform good as initially he has some new talent and caliber.
This involves the exchange of knowledge and information in between the boss and his subordinate about the work agenda and the performance desired. This reflects a negotiation.
Anderson Corporation has purchased a group of assets for $ 15,600. The assets and their relative market values are listed below.
Land: $7,400
Equipment: $2,600
Building: $3,400
Which of the following amounts would be debited to the Land account? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
A: $4,467
B: $2,964
C: $3,900
D: $8,580
Answer:
D: $8,580
Explanation:
Land = $7,400*$ 15,600/13400
= $8,580
Therefore, The amounts would be debited to the Land account is $8,580.
To determine the debit amount to the Land account when several assets are acquired for a lump sum, you need to proportionally distribute the total purchase price between the assets based on their market values. In this case, by proportionally distributing the $15,600 purchase price, we get a debit amount for the Land account of $8,615.
Explanation:The key to solving this problem involves understanding proportionate distribution. When several assets are acquired for a lump sum, we divide the cost of each asset according to its market value. Here are the key steps:
Unfortunately, none of the provided options matches this calculation. The answer is $8,615.
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Daniel shares the details of a recent enjoyable trip to friends. The trip was arranged by a travel firm, and he recommends to his friends that they contact the same travel firm, noting the firm offers customized packages. Identify the media that best represents the communication by Daniel.
Answer:
earned media
Explanation:
Earned media is free publicity for a company. Since the company provided such a good service to Daniel, he is willing to tell his friends to use that same company when they plan a trip. Before we used to call this word of mouth publicity but since people now are more involved with social media than actual personal relations, the term has changed to earned media or online word of mouth.
This type of publicity is by far the most effective since Daniel's friends know that he is being sincere and that he probably had a very good time during his trip. No type of paid advertisement can match that.
The question primarily delves into the types of media used for communication. In Daniel's case, he either uses interpersonal (oral) communication or digital media, depending on the medium he uses to share his travel experience. His interaction also indirectly plays a role in advertising the travel firm's services.
Explanation:In the context of Daniel sharing the details of his enjoyable trip arranged by a travel firm with his friends, the media that represents his communication could be considered as oral communication or interpersonal communication. Here, Daniel uses direct, face-to-face conversation to share his experience and recommendation. However, if Daniel opts to share this information over digital platforms such as social media, it could also be classified as digital media in the form of social networking.
It is also interesting to note that while the conversation seems informal and personal, it indirectly serves as a form of advertising for the travel firm and promotes their customized packages. This aligns with the concept of word-of-mouth marketing increasingly acknowledged in the business and media fields.
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________ is an unpaid form of promotion. It can have positive and negative effects on the recipient. For example, when you log onto CNN and read that four auto assembly-line plants are closing, it is not good news for our economy. However, on the same site, if you read about a company's water recycling effort targeted toward good stream management, you are usually impressed.a) Product placementb) Viral marketingc) Publicityd) Sales promotion
Melissa is a minor who agrees to purchase a car from Umberto for $10,000 one month after she turns eighteen years of age. On turning eighteen, Melissa writes to Umberto stating that she still agrees to purchase the car. Melissa's contract with Umberto is:
Answer:
Voidable contract
Explanation:
Voidable contract is an official agreement between two parties that can be made invalid for a number of causes, ranging from a breach of contract, a misrepresentation or scam.
Lino is a linebacker on his college football team. He is concerned about achieving adequate hydration during intense, hot summer football practices. Lino weighs himself before and after practice and notices that he loses five pounds by the time practice is over. How many cups of water should he drink to replace these fluid losses?a. 2 cups of water
b. 7 cups of water
c. 14 cups of water
d. 21 cups of water
Answer:
C) 14 cups of water
Explanation:
Athletes should consume between 2 to 3 cups of water or other fluids (like Gatorade) for every pound lost in order to prevent dehydration.
If Lino losses 5 pounds during practice, he should drink between 10 to 15 cups of water. Option C, with 14 cups of water is the only option that falls in that range.
The ________ method is simple to use and helps management think about the relationships between promotion spending, selling price, and profit per unit. It wrongly views sales as the cause of promotion rather than the result.
Answer:
Percentage-of-sales
Explanation:
The percentage of sales method is money related evaluating technique that organisations use to anticipate their business development on a yearly premise. They utilise this data to anticipate the measure of financing they have to gain to help achieve their objective. The key segment of this methodology is the development in organisation deals. This method is beneficial for the management to understand price, and profit evaluations.
Chan has been happily married to Mei Lin for the last five years and is very secure in their relationship. Over the last year, he has worked very hard to try to get a bonus and recognition from his job. According to Maslow, Chan has achieved the love level and is attempting to reach the _____ level.
Final answer:
According to Maslow's hierarchy of needs, Chan has achieved the love level and is now attempting to reach the respect level so the blank will be filled with the word respect.
Explanation:
According to Maslow's hierarchy of needs, the love level represents the need for belongingness and intimate relationships. Chan has achieved this level by being happily married to Mei Lin for the last five years. Now, he is attempting to reach the respect level, which refers to understanding another person's full potential and the realization of that potential. It may be expressed in various ways, such as becoming an ideal husband, ideal parent, or in many other ways.
The heading of an ad in a women's magazine reads, "Charlotte BB cream has been approved by dermatologists. It is good for sensitive skin and has no side effects." The rest of the ad copy explains the benefits of the BB cream and features user testimonials. By placing its most important message in the heading, the ad's source is hoping its message benefits from the:
A.
primacy effect.
B.
recency effect.
C.
sleeper effect.
D.
credibility effect.
E.
compliance hierar
Answer: Option (A)
Explanation:
Here, in this particular case the ad's source are believing that their message will benefit from the primacy effect. The ad organization is using the primacy effect, so as to have their customers commemorate the first section or piece of the information they come across better than the information which is further presented at the later stage.
Here in this case the Charlotte BB cream is putting forth the prime message , i.e. the cream is good for sensitive skin and is tested by dermatologist and later rest of the message continues.
Which of the following best defines the term commodity? a. A physical object we find, grow, or make to meet our needs and those of others. b. An activity that benefits people, such as health care, education, and entertainment. c. An economic system which adheres to the principles of socialism. d. A benefit given to those who participate in the capitalist market.
Answer: A physical object we find, grow, or make to meet our needs and those of others.
Explanation: A commodity is an object that possesses a certain form of value, it can be used to meet an immediate need of a person.
It can be grown or produced to meet the specified needed requirements of the particular need it solves.
The term 'commodity' is used by economists to define any physical object we find, grow, or make that meets our needs or the needs of others.
Explanation:In answering the question, which of the following best defines the term commodity, let's start with the fact that economists use the term commodity to refer to a physical object that we find, grow, or make to meet our needs and those of others. This term can certainly include things like the food you eat or the home you live in, typically identified as private goods.The term 'commodity' is used by economists to define any physical object we find, grow, or make that meets our needs or the needs of others. For instance, a farmer who grows corn owns that corn, and since only a finite amount of corn exists, others may want to trade their goods for it if their own food supplies begin to dwindle which contributes to the commodity market.
Further, we see commodities prominently in industrial societies where people buy, consume, and own an extraordinary amount of stuff. Companies produce and market a wide range of commodities, often attaching special meanings to them.
So, considering the options provided, the best answer would be: A commodity is 'A physical object we find, grow, or make to meet our needs and those of others'.
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The ______ approach gives upper management a quick but thorough view of the organization via four indicators:
customer satisfaction,
internal processes,
innovation and improvement activities,
and financial measures.
Answer: Balanced scorecard
Explanation:
The balanced scorecard is referred to as the strategy administration management method. It is also known to be a semi structured report. It is foremost utilized by the employees i.e. managers of the organization in order to keep the records of implementation and enforcement of the activities, which are undertaken by their employees within the authority and control , so as to monitor the circumstances arising from this.
What can serve as search engines, site reminders, or personal surfing assistants? a. Shopping and information agents b. Data-mining agents c. Heuristic-data agents d. Monitoring and surveillance agents
Answer:
The correct answer is A. Shopping and information agents
Explanation:
When a customer needs to acquire goods in the market, he needs the best information regarding those goods. That will allow you to optimize your purchases and act with good judgment.
If it is a minor purchase, the customer can do a market study. But when they are imported products, or when it comes to foreign trade operations, it is when it is more advisable to go to these professionals.
A purchasing agent acquires supplies and goods of all kinds for its customers, which can be individuals or companies. These clients need the goods to be able to develop their economic activity, but they are not aware of the market in a broad sense. That is why they resort to the figure of the purchasing agent, to do that work for him.
To carry out their functions, purchasing agents follow several steps:
First they evaluate all the possible suppliers, investigating their degree of reliability and seriousness in the commercial relations.They contact them, negotiating quantities and prices, to get the best possible product, at the best price. Sometimes they request a sample of the product, to present it to the customer. This will determine if it suits your needs or not. Manage the entire purchase chain, solving any problems that may arise, until the final delivery of the product takes placeFinal answer:
Shopping and information agents act as search engines, site reminders, or personal surfing assistants, providing helpful online services to users.
Explanation:
Tools that can serve as search engines, site reminders, or personal surfing assistants are commonly referred to as shopping and information agents. These agents use software programs to help users find information online, keep track of websites for changes, and provide personalized services based on the user's browsing habits or preferences.
For example, a shopping agent might track the price of a product across different websites and notify the user when the price drops. This kind of technology is an integral part of the user experience on the web, and understanding how users interact with these tools is essential in the field of human factors psychology.
You are evaluating a project that will cost $500,000, but is expected to produce cash flows of $125,000 per year for 10 years, with the first cash flow in one year. Your cost of capital is 11% and your company’s preferred payback period is three years or less.
1. What is the payback period of this project?
2. Should you take the project if you want to increase the value of the company?
Answer:
1. 4 years
2. No
Explanation:
Payback period calculates the amount of time to recoup the total investment made on a project. It calculates how long the cash flows generated from a project would cover the cost of the project.
The cost of the project is $500,000
Cash flows are $125,000 per year for 10 years.
In the first year, the cost of the project is reduced by $125,000 and becomes $375,000.
In the second year, the cost of the project is reduced by $125,000 and becomes $250,000.
In the third year, the cost of the project is reduced by $125,000 and becomes $125,000.
In the fourth year, the cost of the project is reduced by $125,000 and becomes $0.
The cost of the project is totally recouped in the 4th year. therefore, the payback period is 4 years.
But the company has a preferred payback period of 3 years ,therefore , the firm won't undertake the project because the payback period is more than 3 years.
Final answer:
The project has a payback period of 4 years, which is longer than the company's preferred 3 years. However, the decision to proceed with the project should also be based on the positives NPV to determine if it will increase the value of the company.
Explanation:
Calculating the Payback Period
The payback period refers to the time it takes for an investment to generate an amount of money equal to the cost of the investment itself. To calculate the payback period for the given project, you divide the initial investment ($500,000) by the annual cash flow ($125,000). This results in a payback period of 4 years (500,000 / 125,000 = 4).
Value Increase for the Company
Whether or not to undertake the project requires consideration beyond just the payback period. While the company's preferred payback period is three years or less, you should also consider other factors like the overall profitability and the net present value (NPV) of the cash flows when deciding if this project will increase the value of the company. Since the cost of capital is 11%, this can be viewed as the discount rate for computing the NPV.
In this case, the NPV is calculated by discounting each of the annual cash flows and the final salvage value at an 11% discount rate and subtracting the initial investment. If the NPV is positive, it means the project is expected to generate value over and above the cost of capital.
If a prospective buyer intends to occupy a single-family home as a residence, the agent should realize this fact could have a direct bearing on_______________.
Answer:
damages, should the buyer default.
Explanation:
Prospective buyer is the one who intends to buy.
Agent is the one who provides the facility of making the deal feasible, for buyer as by providing options to buy, and finding deals within the reasonable price range.
In any case if the buyer makes any kind of default there will be damages which the agent will bear.
Thus, while making the deal the agent shall realize that these things can happen.