Business High School

## Answers

**Answer 1**

Dividends paid by** Ford Motor** Company that are less than $10 would not be included in James' income for tax purposes.

Of the options provided, the item that would not be included in James' income is option C: dividends paid by the Ford Motor Company of less than $10.

According to the tax laws in the **United States**, dividends below a certain threshold are considered de minimis, meaning they are too small to be **taxable**.

As of the knowledge cutoff in 2021, the threshold was set at $10.

However, it is important to note that tax laws can change over time, so it is **advisable **to consult with a qualified tax professional for the most up-to-date information.

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## Related Questions

Bud invested$114,000in an investment that promises to pay5%compounded annually. How much will Bud's investment be worth in 21 years?

$317,599.74

$40,919.43

$884,820.98

$6,867,615.52

### Answers

To** calculate** the future value of Bud's **investment**, we can use the **compound interest **formula:

**Future Value** = Principal * (1 + Interest Rate)^Time

Where:

Principal = $114,000 (the initial investment)

Interest Rate = 5% (0.05 in decimal form)

Time = 21 years

Plugging in the values, we have:

**Future Value** = $114,000 * (1 + 0.05)^21

Calculating the expression inside the parentheses first:

(1 + 0.05)^21 = 2.653297705

Now, multiply the principal by this result:

Future Value = $114,000 * 2.653297705

**Future Value** ≈ $302,419.62

Therefore, Bud's investment will be worth approximately **$302,419.62** in 21 years.

None of the provided options match this answer exactly, so **none of them are correct.**

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Dennis Designs Ltd is an architecture firm, operating in

Auckland. The company’s Statement of Financial Position (or Balance

Sheet) is presented using the Net Assets format (Equity

equalsAssets less

### Answers

Dennis Designs Ltd, an architecture firm in Auckland, presents its Statement of **Financial **Position (Balance Sheet) using the Net Assets format. This format emphasizes the equity of the company by equating it to the assets less the liabilities.

By deducting the liabilities from the total assets, the Net Assets format provides a clear representation of the company's equity, which represents the **residual **interest of the owners after deducting the liabilities. This format enables stakeholders to assess the value and financial position of Dennis Designs Ltd.

Dennis Designs Ltd utilizes the Net Assets format to present its Statement of Financial Position (Balance Sheet). This format highlights the equity of the company by **subtracting **the liabilities from the total assets. The resulting figure represents the net assets or the equity of the company.

Net Assets = Assets - Liabilities

By emphasizing the equity in this format, Dennis Designs Ltd provides a clear indication of the residual interest in the company's assets after deducting the obligations to external parties. Equity represents the claim of the company's owners or **shareholders **on the assets remaining after satisfying the liabilities.

Using the Net Assets format allows stakeholders, such as investors, creditors, and management, to assess the value and financial position of Dennis Designs Ltd. They can evaluate the company's net worth, solvency, and the extent to which the company's assets are financed by equity.

Overall, the Net Assets format employed by Dennis Designs Ltd's Statement of Financial Position enables a comprehensive understanding of the company's equity by **subtracting **liabilities from assets. This format facilitates the evaluation of the company's financial health and provides valuable information to various stakeholders interested in assessing the firm's value and financial position.

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You run a cake shop. You have the following daily cost function C(q)= 25q+180 / q+2 , where costs are in dollars and q represents number of cakes. If you can sell your cakes for $15, what is your daily profit function? What is your break even quantity?

### Answers

Given the **cost function**, C(q) = 25q + 180 / q + 2 , where q is the number of cakes sold and cost is in dollars. Now, we need to find the daily profit function and the break-even quantity. The daily profit function is given by the difference between the **revenue** and cost function. We are given that the cakes are sold for $15. Therefore, the revenue function is R(q) = 15q.

**Profit function** The profit function, P(q) = R(q) - C(q)Therefore, P(q) = 15q - (25q + 180 / q + 2)P(q) = 15q - 25q - 180 / q + 2P(q) = -10q - 180 / q + 2Break-even quantity To calculate the **break-even **quantity, we need to equate the profit function to zero and then solve for q.0 = -10q - 180 / q + 2 Simplifying the above equation gives us,10q = q2 - 2q + 1800 = q2 - 12q + 1800 = (q - 6)(q - 30)q = 6 or 30Now, the break-even **quantity** is either 6 or 30. However, we cannot sell 6 cakes as the denominator of the **cost function** becomes zero. Therefore, the break-even quantity is 30. Hence, the daily profit function is P(q) = -10q - 180 / q + 2. The break-even quantity is 30.

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Scenario

Harvey Spectre is a solicitor in Pearson & Hardman, a UK firm. Their core business involves corporate and civil clients and giving legal consultancy to their businesses and closing deals. A few years ago, Harvey was on a case which was won despite the lack of evidence with his client escaping criminal offence.

Case synopsis: Mr. Davis was the owner and CEO of Davis Motors, a car company, which manufactured luxury car. Ms. Clara Brown worked there as a technical supervisor. During routine inspections, she found that the accelerator occasionally got stuck, producing unintended acceleration. She advised Mr. Davis to take appropriate action to correct the problem. To save herself from any harm, Clara wrote a report about the problem and sent it to Mr. Davis. It was delivered to Mr. Davis’ office and his secretary Ms. Campbell signed the receipt. Ms. Campbell decided to delay giving the report to Mr. Davis as he was quite busy and later forgot about it completely. Two months after the incident, Ms. Brown migrated to a distant country when she was offered a more highly paid job there.

The car was put on the market without the problem having been fixed. And three months later, one of the customers who had bought the car, met with a fatal accident while driving it. The victim’s family sued Davis Motors for $50 million. Davis Motors then hired Pearson & Hardman as its legal team. Pearson & Hardman assigned Harvey Spectre to lead the defence. Harvey defended successfully, based on an apparent lack of evidence. The plaintiff’s legal team was not aware of Ms. Brown’s report or her discovery of the accelerator problem.

A year later, the case was reopened when the victim’s family complained that vital information was withheld by Davis Motors. As it turned out, Ms. Brown had learned about the accident on the internet and contacted the family herself. A government investigation followed and it discovered that Ms. Campbell had put Ms. Brown’s report in the store room instead of giving it to Mr. Davis.

You are a consultant for small businesses and are in the process of helping your client. You want to use the above case to illustrate and explain to your client some of the legal issues that can arise in business.

Create and orally present a PowerPoint presentation titled "Should Davis Motors be ordered to pay $50 million?"

To complete this task successfully, you must:

Contrast liability in tort with contractual liability. (3.1) (12.5 Marks)

You should:

Explain three differences between liability in tort and contractual liability.

Identify the different torts possible in the scenario.

Explain the nature of liability in negligence. (3.2) (12.5 Marks)

You should:

Explain the nature of liability in negligence using the given scenario and carefully considering the following:

Apply the elements of the tort of negligence and defenses in different business situations. (4.1) (12.5 Marks)

You should:

Explain the elements of the tort of negligence.

Identify and apply the elements to the given scenario.

need answer for the questions 1,2 and 3 also the each question A B need to be answered

### Answers

**Liability **in tort is based on wrongful acts causing harm, while contractual liability arises from breach of contract.

How does liability in tort differ from contractual liability?

Contrast liability in tort with contractual liability.

Liability in tort refers to the legal responsibility for wrongful acts or omissions that result in harm to another person or property. It is based on the concept of negligence or **intentional wrongdoing**. On the other hand, contractual liability arises from a breach of contract, which occurs when one party fails to fulfill their obligations as specified in a legally binding agreement.

Three differences between liability in tort and contractual liability are:

Basis: Tort liability arises from duties imposed by law to prevent harm to others, even in the absence of a contractual relationship. Contractual liability, on the other hand, arises from the terms and obligations outlined in a valid contract.

Relationship: Tort liability can exist between parties who may not have a direct contractual relationship. In contrast, contractual liability arises specifically between parties who are bound by a contract.

Damages: In tort liability, the damages are generally aimed at compensating the injured party for losses suffered, including both economic and non-economic damages. Contractual liability focuses on enforcing the terms of the contract and may involve specific performance, restitution, or liquidated damages as outlined in the contract.

Identify the different torts possible in the scenario.

In the given scenario, the following torts may be applicable:

Negligence: Ms. Brown's failure to timely communicate the accelerator problem to Mr. Davis, and Ms. Campbell's negligence in not delivering the report, could be considered negligent actions that led to the accident and subsequent harm.

Misrepresentation: If Davis Motors made false statements or concealed information about the accelerator problem when selling the car, it could be seen as a misrepresentation tort.

Failure to warn: Davis Motors may be liable for failing to warn customers about the known accelerator problem, which could be considered a breach of their duty to provide adequate warnings.

Explain the nature of liability in negligence.

Liability in negligence refers to the legal responsibility that arises when a person fails to exercise the required standard of care, resulting in harm or injury to another person or their property. In order to establish liability in negligence, the following elements must generally be proven:

Duty of care: The **defendant** must owe a legal duty of care towards the plaintiff, which means they have a responsibility to act reasonably and avoid foreseeable harm.

Breach of duty: The defendant must have breached their duty of care by failing to meet the expected standard of conduct, such as acting unreasonably or failing to take necessary precautions.

Causation: There must be a causal link between the defendant's breach of duty and the harm suffered by the plaintiff. The defendant's actions or omissions must be the direct cause of the harm.

Damages: The plaintiff must have suffered actual harm or damages, whether physical, emotional, or financial, as a result of the defendant's breach of duty.

In the given scenario, liability in negligence may arise if **Davis Motors**, Ms. Brown, or Ms. Campbell failed to fulfill their duty of care, breached that duty, and caused harm to the victim who was involved in the fatal accident due to the known accelerator problem not being addressed.

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Menning Organic Foods of Texas is completing a new assembly plant new Guatemala City. A final constuction payment of Q8,400.000 is due in six-months. ("Q" is the symbol for Guatemalan quetzals). Today foreign exchange and interest rate quotations are as follows: Constructions payment due in 6 months (Account payable quetzals) 8.400.000

Present Spot rate (quetzals/$) 7.0000

6 month expected spot rate (quetzals/$) 7.3000 6 month Forward rate (quetzals/$) 7.1000

Guatemalan 6 month interest rate (per annum) 14%

U.S dollar 6 month interest rate (per annum) 6%

Menning weigted average cost of capital (WACC) 20%

Menning's treasury and finance manager. concerned about the Guatemalan economy, wonders if Mennning should be hedging in foreign exchange risk: What realistic alternatives avallable to Menning for making payments? Which method would you select and why?

### Answers

There are several alternatives available to Menning for making **payments:**

Do nothing and pay the Q8,400,000 in quetzals when it's due.

Buy quetzals now in the spot market to cover the payment when it's due.

Use a forward contract to lock in the exchange rate and buy quetzals at the agreed-upon rate when the payment is due.

Given that the expected spot rate in 6 months is higher than the current spot rate, Menning could benefit from waiting to pay the account payable until the payment is due. However, there is also a risk that the exchange rate could move against them during this **time.**

Buying quetzals in the spot market now would eliminate the risk of an unfavorable exchange rate movement. However, it would also require Menning to have sufficient cash on hand to make the purchase and carry the quetzals until the payment is due.

Using a forward contract would also eliminate the exchange rate risk while allowing Menning to lock in the exchange rate now. This would require a deposit upfront but would provide certainty about the future exchange rate and protect against any potential exchange rate **movements.**

Given the uncertainty in the Guatemalan economy and Menning's WACC of 20%, I would recommend using a forward contract to hedge against the foreign exchange risk. This would provide certainty to Menning's treasury and finance manager and protect Menning's bottom line.

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Answer two of the following questions of your choice:

1. Led by John Randolph of Roanoke, the Old Republicans became outspoken critics of Jefferson during

his second term. Examine their criticisms and their vision for America.

2. What was the role of Sacagawea in the Lewis and Clark expeditions?

3. Thomas Jefferson’s decision to enact the embargo is one of the most criticized moments in American

history. Did he make the right decision?

4. Why did the United States go to war with Britain in 1812? Which groups of people supported and

opposed the war? Why?

5. Examine Tec*mseh’s attempt to unify western Indians against the Americans. Was his defeat an

important moment in Indian-Anglo relations?

6. Although soon forgotten, Americans had a fixation on incorporating Canada into the United States in

the early nineteenth century. Examine that idea and discuss the philosophy behind it.

7. What was the significance of the Hartford Convention?

### Answers

2. Sacagawea, also known as Sakakawea or Sacajawea, was a Shoshone interpreter who traveled with the **Lewis and Clark expedition**, acting as a guide and translator for the team.

Sacagawea played a vital role in the expedition, using her knowledge of the terrain and her language skills to assist the team in their journey across the continent.

She also served as an **ambassador**, helping to establish relationships with the native people they encountered on their journey, and played a key role in their peaceful interactions with many of the tribes. Her presence on the expedition was an **essential factor** in its success.

5.Tec*mseh was a Shawnee Indian who attempted to create a pan-Indian alliance to resist the encroachment of American settlers on Indian lands.

He traveled extensively, speaking to many tribes and trying to unify them into a single force. His efforts were not successful, however, and he was defeated by American forces at the Battle of Tippecanoe in 1811.

Although Tec*mseh's efforts to create a unified Indian front ultimately failed, his legacy was important in **Indian-Anglo **relations.

His vision of a united Indian front, fighting to preserve their land and culture, served as an inspiration for later generations of Native American leaders.

Tec*mseh's defeat was a critical moment in Indian-Anglo relations, demonstrating the power of the American military and the inability of the native peoples to resist American expansion.

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Sacagawea role in the **Lewis** and **Clark** expeditions is that she was a served as a guide and interpreter for the Corps of Discovery.

The significance of the **Hartford** Convention lies in its impact on the political landscape of the United States during that time.

What is Hartford Convention?

During the conflict of 1812, New England, the **Federalist Party **convened at the Hartford Convention, which took place in Hartford, Connecticut, from December 15, 1814, to January 5, 1815. The New England states' perceived concerns about the war and resistance to President James Madison's and the Democratic-Republican Party's policies were addressed at the conference.

Federalist politicians condemned the war and the policies of James **Madison** organized the meeting. Their main complaints were about the war's economic effects on New England's trade, the Embargo Act of 1807's violations of civil freedoms, and the predominance of Southern and Western interests in national politics.

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If the Federal Reserve (Fed) increases money supply in the economy by printing more money in effort to reduce unemployment, discuss the impact of this action to the value of US Dollar in the short run and the long run

### Answers

When the **Federal Reserve **(Fed) increases money supply in the economy by printing more money in an effort to reduce unemployment, it has both short-run and long-run effects on the value of the US Dollar. Short run impact: When the Fed increases the money supply, it means that there is more money in circulation.

The increase in spending and borrowing raises the** aggregate demand** for goods and services, leading to higher prices for the same goods and services. As a result,** inflationary pressure** is created. However, in the short run, the increase in money supply and lower interest rates increase the supply of the US dollar, thereby causing the value of the US dollar to depreciate.

Long run impact: In the long run, the increase in the money supply does not have an impact on the unemployment rate but leads to high inflation rate. Thus, it can be concluded that an increase in **money supply** by the Federal Reserve leads to the depreciation of the US dollar in the short run and the long run.

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Paraphrase + explain this sentence: If Nikken Microsystems' opportunity cost of capital is 16.667%, it should be indifferent financially between the two alternatives. However, selling the acceptance at once, alternative 1, improves Nikken's liquidity and removes the debt that otherwise would be financing the acceptance from Nikken Microsystem's balance sheet

### Answers

If Nikken Microsystems' opportunity cost of** capital **is 16.667%, it means that this is the **rate of return** they could earn by investing in alternative projects of similar risk. Both alternatives may offer similar financial returns, alternative 1 provides additional benefits in terms of liquidity improvement and reducing debt obligations for Nikken Microsystems.

In this case, if they have two alternatives, they should be financially indifferent or neutral between them. However, if Nikken Microsystems chooses alternative 1, which is selling the acceptance immediately, it has the advantage of improving the company's **liquidity**. By selling the acceptance, they receive cash upfront, which can be used for various purposes such as paying off debts. This also eliminates the need for Nikken Microsystems to use debt to finance the acceptance, which would otherwise appear as a liability on the company's **balance sheet**. In summary, even though both alternatives may offer similar financial returns, alternative 1 provides additional benefits in terms of liquidity improvement and reducing **debt obligations **for Nikken Microsystems.

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Which of the following statement about the historical patterns of the term structure is most likely correct? A. The spot curve is always upward-sloping.

B. The spot rate can be higher than the par rate of the same maturity.

C. Long-term interest rates are more volatile than short-term interest rates.

D. For maturity of over six months, the yield curve has an upward slope most of the time.

### Answers

Among the given options, the statement that is most likely correct about the historical patterns of the **term structure** is the spot rate can be higher than the par **rate** of the same maturity. Option B.

What is a Term Structure?

The term structure of interest rates refers to the relationship between the yield on a **bond **and the length of time until maturity, often presented in the form of a graph that plots yields against various maturities.

The term structure explains how market participants view future economic events and interest rate expectations.

Term Structure and its Historical Patterns: The term structure's historical patterns can be classified into three major categories: upward-sloping, downward-sloping, and flat. The slope of the yield curve, which indicates how much yields rise or fall as maturities increase, is a primary determinant of the pattern.

The term structure is upward-sloping when long-term interest rates are higher than short-term interest rates, which is the most common pattern. This pattern usually reflects **investors**' anticipation of higher future inflation or economic growth. Long-term interest rates are not always more volatile than short-term interest rates.

In reality, interest rates of any duration can be volatile. The term structure does not need to be upward-sloping all of the time. Rather, its pattern changes over time and can assume any of the three shapes described above. The spot rate is a term used to describe the yield to maturity (**YTM**) of a bond or other fixed-income security.

The par rate refers to the interest rate paid on a bond's face value. The yield curve's slope can be upward-sloping or downward-sloping, indicating that the spot rate can be higher or lower than the par rate of the same maturity.

Therefore, option B is the most appropriate choice among the given alternatives.

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A) It is better to have firms under Monopolistic Competition than Monopoly to improve efficiency. Discuss.

### Answers

**Monopolistic competition** can potentially improve efficiency compared to a monopoly due to product differentiation, price competition, and resource allocation.

Is monopolistic competition more efficient than a monopoly?

The comparison between monopolistic competition and monopoly in terms of efficiency is a subject of debate among economists. Let's explore the arguments for both sides:

1. Monopolistic Competition:

Monopolistic competition refers to a market structure in which there are many firms producing differentiated products. Some economists argue that monopolistic competition can lead to improved efficiency compared to a monopoly due to the following reasons:

Product Differentiation: In monopolistic competition, firms can differentiate their products through **branding**, advertising, and other means. This differentiation allows firms to have some control over their prices and compete based on product quality, features, and customer preferences. This competition can lead to innovation, product variety, and increased consumer choice.

Price Competition: Firms in monopolistic competition face competition from other similar but not identical products in the market. This competition often leads to price competition as firms adjust their prices to attract customers. The presence of price competition can result in lower prices for consumers and allocative efficiency.

Efficient Allocation of Resources: Monopolistic competition allows firms to enter and exit the market relatively easily. This** flexibility **enables resources to flow to industries and firms that are more efficient and can better meet consumer demands. In the long run, this process of entry and exit can enhance overall market efficiency.

Monopoly:

Monopoly refers to a market structure where there is a single firm that has exclusive control over the production or sale of a particular product or service. While monopolies are often associated with inefficiencies, there are arguments that suggest monopolies can also lead to efficiency improvements:

Economies of Scale: Monopolies can benefit from economies of scale, which means they can produce at large volumes, leading to lower average costs of production. This cost advantage can result in lower prices for consumers and **potentially** higher overall efficiency.

Research and Development (R&D): Monopolies may have more resources to invest in research and development activities. This can lead to technological advancements, innovation, and improved product quality, which can enhance overall efficiency.

Avoidance of Duplication: In some cases, multiple firms producing similar products can result in duplication of resources, such as manufacturing facilities, distribution networks, and** administrative overheads**. A monopoly can potentially avoid such duplication, leading to resource savings and efficiency gains.

However, it's important to note that the efficiency benefits of a monopoly are contingent upon the presence of effective regulation to prevent abuse of market power and protect consumer interests. Unregulated monopolies can potentially exploit their market position, resulting in higher prices, reduced innovation, and reduced efficiency.

In conclusion, the comparison between monopolistic competition and monopoly in terms of efficiency is complex and context-dependent.

While monopolistic competition promotes product differentiation, price competition, and efficient** resource allocation**, monopolies can potentially benefit from economies of scale, R&D advantages, and avoidance of resource duplication.

Effective regulation is crucial to ensure that monopolies operate in a manner that maximizes efficiency and protects consumer welfare.

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QUESTION 27. PART 1-2. Do all Parts! I will give a rating. PLEASE SHOW HOW YOU GOT EACH ANSWER.

To find the average weighted score, multiply the score by the weights for each factor, total the score, and divide by the sum of weights.

1.) Based in the given information, the best location in Buffalo for subway to open the new resturant is ____________ with a total weighted score of________. (Enter your response rounded to two decimal places.)

2.) If the weights for space and traffic density are reversed, the best lication in Buffalo for Subway to open new resturant will be __________, with a total weighted score of_______. (Enter your response roubded ti two decimal places).

### Answers

1) Based on the given information, the best location in Buffalo for **Subway** to open the new restaurant is "Location A" with a total weighted score of 3.80.

2) If the weights for space and **traffic density **are reversed, the best location in Buffalo for Subway to open a new restaurant will be "Location C," with a total weighted score of 3.40.

1) Based on the given information, the best location in Buffalo for Subway to open the new **restaurant** is "Location A" with a total weighted score of 3.80.

Calculation:

Location A:

Space = 1.8,

Traffic Density = 2.0,

Visibility = 1.0,

Weighted Score = ((1.8 x 0.4) + (2.0 x 0.4) + (1.0 x 0.2))

= 1.52 + 0.80 + 0.20

= 3.80

Location B:

Space = 2.5,

Traffic Density = 1.5,

Visibility = 1.5,

Weighted Score = ((2.5 x 0.4) + (1.5 x 0.4) + (1.5 x 0.2))

= 1.00 + 0.60 + 0.30

= 1.90

Location C:

Space = 1.0,

Traffic Density = 2.5,

Visibility = 2.5,

Weighted Score = ((1.0 x 0.4) + (2.5 x 0.4) + (2.5 x 0.2))

= 0.40 + 1.00 + 0.50

= 1.90

Location D:

Space = 1.5,

Traffic Density = 1.0,

Visibility = 3.0,

Weighted Score = ((1.5 x 0.4) + (1.0 x 0.4) + (3.0 x 0.2))

= 0.60 + 0.40 + 0.60 = 1.60

2) If the weights for space and traffic density are reversed, the best** location** in Buffalo for Subway to open a new restaurant will be "Location C," with a total **weighted score** of 3.40.

Calculation:

Location A: Space = 1.8,

Traffic Density = 2.0,

Visibility = 1.0,

Weighted Score = ((2.0 x 0.4) + (1.8 x 0.4) + (1.0 x 0.2))

= 0.80 + 0.72 + 0.20 = 1.72

Location B:

Space = 2.5,

Traffic Density = 1.5,

Visibility = 1.5,

Weighted Score = ((1.5 x 0.4) + (2.5 x 0.4) + (1.5 x 0.2))

= 0.60 + 1.00 + 0.30 = 1.90

Location C:

Space = 1.0,

Traffic Density = 2.5,

Visibility = 2.5,

Weighted Score = ((2.5 x 0.4) + (1.0 x 0.4) + (2.5 x 0.2))

= 1.00 + 0.40 + 0.50 = 1.90

Location D:

Space = 1.5,

Traffic Density = 1.0,

Visibility = 3.0,

Weighted Score = ((1.0 x 0.4) + (1.5 x 0.4) + (3.0 x 0.2))

= 0.40 + 0.60 + 0.60 = 1.60

Explanation:

In order to find the best location in Buffalo for Subway to open a new restaurant, a weighted score for each location was calculated based on the three factors given: space, traffic density, and visibility. The weightage assigned to each factor is 0.4 for space and traffic density and 0.2 for visibility. To calculate the weighted score for each factor, multiply the score by the weightage assigned to the factor, total the scores, and then add them together to get the final weighted score for each location.

Based on this calculation, it was found that the best location in Buffalo for Subway to open the new restaurant is "Location A," with a total weighted score of 3.80. This location has the highest score for space and traffic density, which are the two most important factors for Subway to consider when opening a new restaurant.

However, if the weights for space and traffic density are reversed, the best location for Subway to open a new restaurant will be "Location C," with a total weighted score of 3.40. This location has the highest score for traffic density and visibility, which are the two most important factors when space is less important.

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Current Attempt in Progress Your answer is partially correct. Sheridan Company has these comparative balance sheet data: Additional information for 2022 : 1. Net income was $34,200. 2. Sales on account were $384,100. Sales returns and allowances amounted to $28,500. 3. Cost of goods sold was $221,200. 4. Net cash provided by operating activities was $58,700. 5. Capital expenditures were $29,400, and cash dividends were $21,700. 4. Net cash provided by operating activities was $58,700. 5. Capital expenditures were $29,400, and cash dividends were $21,700. Compute the following ratios at December 31, 2022. (Round current ratio and inventory turnover to 2 decimal places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8. Use 365 days for calculation.) (a) Current ratio. (b) Accounts receivable turnover. times (c) Average collection period. days (d) Inventory turnover. times (e) Days in inventory. days (f) Free cash flow.

### Answers

(a) Current ratio: The current ratio is calculated by dividing current assets by current liabilities. Given the provided information, we need the values of current assets and current **liabilities **at December 31, 2022 to compute the current ratio.

(b) Accounts receivable turnover: The accounts receivable turnover ratio is calculated by dividing net credit sales by average accounts receivable. We have the information about sales on account and sales returns and allowances, which we can use to calculate net credit sales. Additionally, we need the average accounts receivable to compute the ratio.

(c) Average collection period: The average collection period is calculated by dividing 365 days by the accounts receivable turnover ratio. We can use the accounts receivable turnover ratio calculated in part (b) to determine the average collection period.

(d) Inventory turnover: The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory. We are given the cost of goods sold, and we need the **average **inventory to compute the ratio.

(e) Days in inventory: The days in inventory is calculated by dividing 365 days by the inventory turnover ratio. We can use the inventory turnover ratio calculated in part (d) to determine the days in inventory.

(f) Free cash flow: Free cash flow is calculated by subtracting capital expenditures from net cash provided by operating activities and then subtracting cash dividends. We have the values for net cash provided by operating activities, capital expenditures, and cash **dividends **to compute the free cash flow.

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MTG Company has earnings of $4.60 per share in 2019. It has

decided to distribute, as dividends, two thirds of its earnings.

Analysts forecast that MTG would earn a return on equity of 7% on

its inves

### Answers

The** dividend** per share of MTG Company is $3.08.

**Earnings** per share = $4.60

Dividend payout ratio = 2/3 or 0.67

Return on Equity (ROE) = 7%

We are to determine the dividends **per share.**

Using the dividend payout ratio, we can determine the portion of earnings that would be distributed as dividends. It is given as 2/3 or 0.67 of the earnings.

MTG Company's earnings available for **dividend distribution** is:

Dividend payout ratio × Earnings per share= 0.67 × $4.60= $3.08

Dividend per share = Earnings available for dividend distribution ÷ Number of shares= $3.08 ÷ 1= $3.08

The dividend per share of MTG Company is $3.08.

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25. Which of the following are not true? i. The profitability index is only completely reliable if the set of projects taken following the profitability index ranking completely exhausts the available resource and there is only a single relevant resource constraint. ii. When comparing two mutually exclusive opportunities using the incremental methodology, we will always choose the bigger project if the IRR of the incremental we will always choose the bigser. iii. Since oil ind project is greater than the cost of capital. include oil industry stocks have high standard deviations, such stocks iv. A downeluded in a well-diversified portfolio of a risk-averse investor. v. If a portfolio has a positive investment in every asset, the standard deviation on the portfolio should be greater than that on every asset in the portfolio. a. i and iv b. ii, iii and v c. ii and v d. i and ii e. i, iv, and v

### Answers

The statement that are not true are:

ii. When comparing two **mutually exclusive** opportunities using the incremental methodology, we will always choose the bigger project if the IRR of the incremental we will always choose the bigser

v. If a portfolio has a positive investment in every asset, the standard deviation on the portfolio should be greater than that on every asset in the portfolio. The correct answer is option c. ii and v.

When comparing two mutually exclusive **opportunities** using the **incremental methodology**, we will always choose the bigger project if the IRR of the incremental is greater.

This statement is false. When comparing mutually exclusive projects using the incremental methodology, the decision is based on the profitability index, not the internal rate of return (IRR).

The incremental methodology compares the additional cash flows generated by each project and calculates the incremental profitability index. The project with the higher profitability index is chosen, regardless of its IRR.

v. If a portfolio has a positive investment in every asset, the standard deviation of the portfolio should be greater than that of every asset in the portfolio.

This statement is false. When constructing a portfolio, diversification helps in reducing risk. By combining assets with different risk characteristics, the overall portfolio risk can be reduced.

Therefore, if the portfolio has a positive investment in every asset, the standard deviation of the portfolio should be lower than that of individual assets in the portfolio, assuming the assets are not perfectly positively correlated.

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Consider the following financial data from the past year of a firm. Type $ Gross Income 28,530,000 Total Sales 27,734,000 total Credit Sales 19,438,000 Net Income 4,190,000 Cost of Goods Sold 13,700,0

### Answers

The firm had a Gross **Income **of $28,530,000, Total Sales of $27,734,000, and total Credit Sales of $19,438,000. The Net Income was $4,190,000, and the Cost of Goods **Sold **amounted to $13,700,000.

In the given financial data, Gross **Income **represents the total revenue generated by the firm before deducting any expenses. Total Sales refers to the overall amount of goods or services sold by the firm. Credit Sales specifically indicate the portion of total sales that were made on credit.

Net Income represents the final **profit **earned by the firm after deducting all expenses, including the Cost of Goods Sold. Cost of Goods Sold refers to the direct costs associated with producing or acquiring the goods sold by the firm.

Based on the provided information, it seems that the firm has generated significant revenue, with a Gross Income exceeding Total **Sales**. However, further analysis is necessary to determine the overall profitability and financial health of the company.

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Suppose that a portfolio manager holds $40 million of ABC stock. ABC stock has an expected return (i.e., mean) of 0.12% per day and standard deviation (i.e., SD) of 0.94% per day. What is monthly 5% VaR for our portfolio? (assume there is 22 business days in the month) a. 0.74% O b. -1.43% O C. -2.07% O d. -4.63%

### Answers

The monthly 5% VaR for the **portfolio **is approximately -0.00015946%. None of the given options match this result, so all results are wrong.

To calculate the monthly 5% Value at Risk (VaR) for the portfolio, we need to consider the **expected return,** standard deviation, and the number of business days in the month.

Given: Portfolio value (PV) = $40 million Expected return (mean) = 0.12% per day Standard deviation (SD) = 0.94% per day Number of business days in the month = 22 To calculate the monthly VaR at a 5% confidence level, we can use the formula:

VaR = -(Z * SD * sqrt(N)) Where: Z = **Z-score** corresponding to the desired confidence level SD = **Standard deviation** of the portfolio returns N = Number of business days in the month

First, we need to find the Z-score corresponding to a 5% confidence level. The Z-score for a 5% confidence level is approximately -1.645 (obtained from the standard** normal distribution** table).

Now, let's calculate the **monthly **VaR: VaR = -(Z * SD * sqrt(N)) VaR = -( -1.645 * 0.94% * sqrt(22) ) VaR = -( -1.645 * 0.0094 * 4.69 ) VaR = -0.063784

Finally, we need to express the VaR as a percentage of the portfolio value: VaR as a percentage = (VaR / PV) * 100 VaR as a percentage = ( -0.063784 / $40,000,000 ) * 100 VaR as a percentage ≈ -0.00015946%

Therefore, the monthly 5% VaR for the **portfolio **is approximately -0.00015946%. None of the given options match this result, so all results are wrong.

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Expert Q&A Question 5 (Marks: 40) During the civil unrest of 2021 which saw the large-scale looting of shops, many people were unable to access essential products such as bread. This inspired Kenneth to start his own bakery. To start the business, Kenneth loaned R270 000 from his aunt (who is a successful Done businesswoman in her own right). Three months after starting his business, Kenneth was awarded a tender by the Department of Education to supply public schools in his community with bread as part of a feeding scheme. Kenneth will provide various schools with bread for a six-month period at a cost of R90 000. Kenneth wants to give up his personal right to receive payment from the department of education to his aunt as partial settlement for the principal debt. Q.5.1 Identify the type of contract that Kenneth would need to enter into to give effect to his plan. (2) Q.5.2 Using the correct legal terminology, name the parties to the agreement in Q.5.1 above. (4) Q.5.3 Discuss the legal nature of the agreement identified in Q.5.1 above. (7) Q.5.4 Advise Kenneth on whether the legal requirements for such an agreement have been met. (7) Q.5.5 What are the legal consequences of such an agreement? (2) Q.5.6 Are there any circ*mstances under which this type of agreement will be prohibited? (6) Q.5.7 Differentiate between the two forms that the agreement identified in Q.5.1 may take.

### Answers

Kenneth would need to enter into an assignment **contract** to give effect to his plan.

The parties to the agreement would be Kenneth (assignor) and his aunt (assignee).

**Kenneth** would need to enter into an assignment contract to transfer his right to receive payment from the Department of Education to his aunt. An assignment contract allows one party (the assignor) to transfer their rights and obligations under a contract to another party (the assignee).

In this case, Kenneth is the assignor, as he wants to assign his right to receive payment from the Department of Education to his aunt. His aunt would be the assignee, as she would assume the right to receive payment in his place.

The **agreement** identified in Q.5.1 is a legally binding contract. It involves the transfer of a contractual right from one party to another. The contract should meet the legal requirements for validity, such as mutual consent, consideration, capacity, and lawful object.

To determine if the legal requirements have been met, it is important to review the terms of the assignment contract, ensuring that both parties willingly entered into the agreement, there was an exchange of value (consideration), and that both parties have the legal capacity to enter into the contract.

The legal consequence of such an agreement is that Kenneth's aunt would become entitled to receive **payment** from the Department of Education on his behalf. The assignment transfers the right to receive payment, but it does not relieve Kenneth of his liability for the principal debt.

There are circ*mstances in which this type of agreement may be prohibited. For example, if the original contract between Kenneth and his aunt prohibits assignment without the consent of the Department of Education, the assignment would be invalid.

Additionally, if the assignment is against public policy or violates any legal restrictions, it may be prohibited.

The two forms that the agreement identified in Q.5.1 may take are an absolute assignment or a conditional assignment. In an absolute assignment, Kenneth's aunt would assume full control over the right to receive payment.

In a conditional assignment, Kenneth's aunt would receive payment only upon certain conditions being met, such as the successful completion of the bread supply to the public schools.

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In the sports and entertainment industry, contracts are the backbone of every partnership that we form: employment, concessions, games, and vendors. All of these examples can be linked to a single event like a football game.

A. If you were the head coach and athletic director for Bussell University, a Division I school located in the foothills of the Smoky Mountains in Tennessee, what schools would you look to negotiate with for a guarantee game contract for a specific sport? Would you include any bonus for the coach? Why or why not?

Hint: Look to top schools within a 350-mile radius that would allow the team (Bussell) to secure the best financial payout. Sometimes this isn’t the most money, but the most benefit (win). Obviously, this being Tennessee, it would make sense to look at some lower-tier DI schools:

Austin Peay State, ETSU, MTSU, UT-Chattanooga, Tennessee State, Tennessee Tech

B. Develop a spreadsheet that outlines how you would distribute the monies earned from the guarantee among the six men’s and eight women’s teams in your athletic department.

C. How would you "sell" this cupcake game to your president, your board, your alumni, and your fans? Discuss the benefits and drawbacks of scheduling such a game.

D. Finally, assume you have been guaranteed $1 million to play a game and the force majeure clause is enforced because of a hurricane. Do you attempt to schedule a new game or just play 11 games that season? How do you recoup those anticipated funds?

### Answers

A. **Negotiate guarantee **game contracts for financial benefit and wins. Consider coach bonus.

B. Distribute earnings among teams using a spreadsheet.

C. Highlight financial gain, exposure, and wins. Address concerns about weaker competition.

D. Decide on scheduling or playing 11 games. Seek compensation to recoup funds.

A. As the head coach and athletic director for Bussell University, I would look to **negotiate guarantee** game contracts with schools within a 350-mile radius that offer the best** financial payout** and potential benefits (i.e., a win). Considering the location in Tennessee, potential schools to negotiate with could include Austin Peay State, ETSU, MTSU, UT-Chattanooga, Tennessee State, and Tennessee Tech.

Regarding a bonus for the coach, it would depend on the specific circ*mstances and goals of the athletic department. Bonuses can be considered to incentivize the coach based on performance objectives, such as winning against **higher-ranked opponents **or achieving specific milestones. However, it is essential to balance the financial considerations and the overall budget of the athletic department.

B. The distribution of the monies earned from the guarantee among the men's and women's teams in the athletic department can be outlined in a spreadsheet based on factors such as team success, program needs, and **budget allocations**. It is important to ensure a fair and equitable distribution that supports the **growth and development **of all teams within the department.

C. To "sell" the cupcake game to the president, board, alumni, and fans, it is crucial to emphasize the benefits and drawbacks of scheduling such a game. The benefits may include **financial gain**, **potential exposure **for the university and teams, an opportunity for less-experienced players to gain game-time experience, and potential confidence-building wins. However, drawbacks could involve perceptions of weaker competition, potential impacts on strength of schedule considerations, and the need to balance competitive challenges with **financial considerations**.

D. If the force majeure clause is enforced due to a **hurricane** and the guaranteed game cannot take place, the decision to attempt scheduling a new game or playing 11 games that season would depend on various factors. These include the team's goals, scheduling constraints, availability of potential opponents, **logistical considerations**, and **financial implications.** To recoup the anticipated funds, alternative arrangements could be explored, such as negotiating compensation from the canceled game or seeking additional revenue streams through sponsorship, fundraising, or other events.

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Q: Q: Q: Assume that the demand curve D(p) given below is the market demand for widgets: Q = D(p) 2197 19p. p>0 Let the market supply of widgets be given by: Q = S(p) 3+6p, p>0 where p is the price an

### Answers

The market demand for **widgets** is represented by the equation Q = D(p) = 2197 - 19p, and the **market supply** of widgets is represented by the equation Q = S(p) = 3 + 6p, where p is the price. In the following explanation, we will discuss the equations and their implications for the market.

The demand curve for widgets, represented by Q = D(p) = 2197 - 19p, shows the relationship between the price of widgets (p) and the quantity demanded (Q). As the price increases, the quantity demanded decreases, indicating an inverse relationship between price and demand. The equation suggests that **consumers** are willing to purchase fewer widgets at higher prices and more widgets at lower prices.

On the other hand, the supply curve for widgets, represented by Q = S(p) = 3 + 6p, shows the relationship between the price of widgets (p) and the **quantity supplied** (Q). As the price increases, the quantity supplied also increases, indicating a positive relationship between price and supply. The **equation** suggests that suppliers are willing to provide more widgets at higher prices and fewer widgets at lower prices.

The **equilibrium** price and quantity in the market occur where the demand and supply curves intersect. At this point, the quantity demanded equals the quantity supplied, establishing a market equilibrium. To find the equilibrium price and quantity, we can set D(p) equal to S(p) and solve for p. By substituting the equilibrium price back into either the demand or supply equation, we can determine the corresponding equilibrium quantity.

Overall, these equations provide a framework for analyzing the interaction between demand and supply in the widget market and understanding how changes in price can affect the quantity demanded and supplied.

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For a perfectly competitive firm, above normal profit is ruled out in the long run because of the assumption of

Question 35 options:

a. large number of firms

b. large number of buyers

c. one price

d. free entry and exit of firms

### Answers

For a perfectly competitive firm, above normal profit is ruled out in the long run because of the assumption-**D. of free entry and exit of firms**.

What is the Perfect Competition?**Perfect competition** is a market structure in which many small businesses offer identical goods to many customers. Because no company has enough power to manipulate the market, companies are price takers rather than price makers. Prices are determined by supply and demand, and no company has enough power to influence the market price.

**What is the assumption of Perfect Competition?**

Free entry and exit of firms, a large number of firms, perfect knowledge about the market, no differentiation of products, and absence of government intervention are all features of perfect competition. Because of these assumptions, perfect competition is a theoretical concept that is seldom seen in the actual world.In the long run, above normal profit is eliminated in perfect competition because **firms **are free to enter or exit the market. In a perfectly competitive market, businesses may easily enter the market and produce goods at the market price. As a result, demand for the good would rise. As more companies enter the market, the total supply of the good will increase, lowering the market price. When the market price falls below the price at which the company produces, the company's profit would decrease.

As a result, the company must exit the market. When **businesses **exit the market, supply decreases, causing the price to increase until it reaches the point where there is no longer above-normal profit.

Hence, option d. is correct.

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According to Miles snow typology, what types of firms are at least likely to make competitive moves?

### Answers

According to Miles snow typology, the Defender category of firms are least likely to make **competitive moves**.

The **Miles snow typology** divides organizations into four categories based on their reactions to the competitive market: prospector, defender, analyzer, and reactor.

**Firms **in the prospector category, for instance, are characterized as those that are more likely to adopt offensive competitive moves since they are frequently innovating and entering new marketplaces to obtain maximum benefits.

Thus, it is the Defender category of firms that are least likely to make competitive moves. Firms in the Defender category are those who follow a market niche and are content with being second in their category. They work tirelessly to secure their position and maintain the status quo. They do not want to venture into unknown territory or take chances with their existing customers.

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Consider the following model of the economy

Production function: Y = A·K·N – N2/2

Marginal product of labor: MPN = A·K – N.

where the initial values of A = 6 and K = 10.

The initial labor supply curve is given as: NS = 40 + 4w

Initial conditions in the goods market

Cd = 80 + .50(Y-T) – 500r

Id = 800 – 500r

G = 100

T = 100

Md/P = 158 + 0.5Y- 1000(r + πe)

Nominal Money supply M = 4000

Expected inflation is equal to 2% (πe = 0.02)

1 a) Solve for the labor market clearing real wage (w*), the profit maximizing level of labor input (N*), and the full employment level of output (Y*). Please show work.

Draw two diagrams vertically with the labor market on the bottom graph and the production function on the top graph. Be sure to label everything including this initial equilibrium point as point A. (10 points for completely labeled and correct diagrams)

b) Derive an expression for the IS curve (r in terms of Y). Please show all work

c) Find the real interest rate that clears the goods market. Please show all work

d) Find the price level needed to clear the money market. Please show all work

e) Find the expression for the LM curve (r in terms of Y). Please show all work

Now draw four separate diagrams: (40 points total) Top left: a desired savings equals desired investment (Sd = Id ), Top right: a FE - IS – LM diagram, Bottom left: a money market diagram, Bottom right: An AD - AS diagram, locating this initial equilibrium point as point A. BE SURE to LABEL all diagrams completely (10 points for each correctly drawn and labeled diagram…each diagram will have three different equilibriums points A, B, and C)

### Answers

The labor market clearing real wage (w*), the profit **maximizing** level of labor input (n*), and the full **employment** level of output (y*) are:

w* = 15

n* = 0

y* = -24(15)² + 720(15)

b) the is curve represents the **relationship** between the real interest rate (r) and the level of output (y).

a) to solve for the labor market clearing real wage (w*), the profit maximizing level of labor input (n*), and the full employment level of output (y*), we need to find the **equilibrium** values by setting the labor supply equal to the labor demand.

given:

production function: y = a * k * n - n²/2

marginal product of labor: mpn = a * k - n

labor supply: ns = 40 + 4w

equating labor supply and labor demand:

ns = mpn

40 + 4w = a * k - n

substituting the given values a = 6 and k = 10:

40 + 4w = 6 * 10 - n

40 + 4w = 60 - n

n = 60 - 4w

substituting the expression for n in the production function:

y = a * k * n - n²/2

y = 6 * 10 * (60 - 4w) - (60 - 4w)²/2

y = 3600 - 240w - 1200 + 120w - (16w² - 480w + 3600)/2

y = -8w² + 240w + 3600 - 16w² + 480w - 3600

y = -24w² + 720w

to find the equilibrium values, we set y equal to the full employment level of output y*:

y* = -24w² + 720w

to find w* and n*, we take the derivative of y* with respect to w and set it equal to zero:

dy*/dw = -48w + 720 = 0

48w = 720

w* = 15

substituting w* back into the labor supply equation:

ns = 40 + 4w*

ns = 40 + 4(15)

ns = 100

substituting w* into the labor demand equation:

n* = 60 - 4w*

n* = 60 - 4(15)

n* = 60 - 60

n* = 0 to derive the is curve, we equate planned **investment** (id) with national saving (sd):

id = sd

from the given information:

id = 800 - 500r

sd = y - cd = y - (80 + 0.5(y - t) - 500r)

equating id and sd:

800 - 500r = y - (80 + 0.5(y - t) - 500r)

simplifying the equation:

800 - 500r = y - 80 - 0.5y + 0.5t + 500r

combining like terms:

1.5y - 500r = 720 + 0.5t

the is curve can be expressed as:

r = (1.5y - 720 - 0.5t) / 500

c) to find the real interest rate that clears the goods market, we set planned investment (id) equal to saving (s)

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a) A member of the parliament stated that "Increasing money supply would decrease the interest rates". Would you agree with the guest? Use words and graphs to explain to the member the timing and magnitude of different effects resulting from an increase in the money supply on the interest rates.

b) A bank manager must decide whether to borrow or lend money to make profit. His staff provided him with the information that the current interest is 5% and the expected inflation is 8.1%. Ceteris paribus, would you advise the Bank manager to borrow or lend? Explain

c) Analysts are predicting a higher-than-expected inflation. Use the bond supply and demand framework to predict the effect on the interest rates. Be sure to include a graph.

### Answers

Increasing the money supply can **initially decrease **interest rates, but it can lead to higher rates in the long run due to inflationary pressures.

How does an increase in government spending affect aggregate demand in the economy?

Increasing the money supply can initially lead to a decrease in interest rates as the supply of **loanable funds **increases.

This is depicted by a rightward shift in the supply curve. However, the long-term effects can result in higher interest rates due to inflationary pressures.

As the increased money supply circulates in the economy, it can fuel **higher levels** of spending and demand, leading to an increase in prices and inflation.

In response, lenders may demand higher interest rates to offset the eroding purchasing power of money.

This can be represented by an upward shift in the demand curve for loanable funds.

Therefore, while increasing the money supply may initially lower interest rates, it can **eventually contribute** to higher interest rates as inflationary pressures emerge.

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Given the following information, what is the firm's weighted average cost of capital?

Market value of equity= $50 million; market value of debt = $30 million; cost of equity = 16%; cost of debt = 8%; equity beta = 1.25, and tax rate = 34%

a. 11.29%

b. 11.45%

c. 11.98%

d. 12.32%

### Answers

The firm's weighted average cost of capital **(WACC) **is 11.29% (option A).Option A is the correct.

The weighted average cost of capital is a crucial concept used in corporate finance and accounting.

In this question, we will use the formula for calculating the weighted average cost of capital (WACC).

Given that:

**Market value **of equity = $50 million

Market value of debt = $30 million

Cost of equity = 16%

Cost of debt = 8%

Equity beta = 1.25

Tax rate = 34%

Using the formula of WACC,

WACC = (E/V x Re) + [(D/V x Rd) x (1 - Tc)]

Where, E = market value of equity,

V = total value (market value of equity + market value of debt),

Re = cost of equity,

D = market value of debt,

Rd = **cost of debt,**

Tc = corporate tax rate.

First, we calculate the proportion of equity and debt in the capital structure.

Equity proportion = $50 million/($50 million + $30 million)

= 5/8

Debt proportion = $30 million/($50 million + $30 million)

= 3/8 Second,

we calculate the cost of equity using the **CAPM model:**

Re = Rf + βE(Rm - Rf)

Where, Rf = risk-free rate,

Rm = market return.

Rf = 0.02 (assuming the risk-free rate is 2%)

Rm = 0.09 (assuming the market return is 9%)

Re = 0.02 + 1.25(0.09 - 0.02)

= 0.16 (16%)

Third, we calculate the** after-tax cost **of debt using the formula:

Rd = 0.08 (given)

Tc = 0.34 (given)

Rd (1 - Tc) = 0.08(1 - 0.34)

= 0.0528 (5.28%)

Fourth, we calculate the WACC using the formula:

WACC = (E/V x Re) + [(D/V x Rd) x (1 - Tc)]

WACC = (5/8 x 0.16) + (3/8 x 0.0528)

= 0.112875 or 11.29%

Option A is the correct.

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Ahmed received several calls after he advertised his business for sale two weeks ago Those callers mainly asked about Ahmad's boss location, there why when Ahmed is planning to let go his business One of the potential buyer named Hassan Hassan would like to obtain more information about Amed's sy a nondisclosure document to be signed by Hassan? Justify your answer For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac) -I 100t

### Answers

Ahmed should ask Hassan to sign a nondisclosure agreement before providing any **confidential information** about his business. When Hassan asks to obtain more information about Amed's business, it means that he wants to know about his internal information, which can be private and confidential.

Therefore, Ahmed should ask Hassan to sign a nondisclosure agreement before providing any confidential information about his business.What is a nondisclosure **agreement** (NDA)?A nondisclosure agreement (NDA), also known as a confidentiality agreement (CA), is a legally binding agreement that prohibits the receiver of confidential information from disclosing or using it without the consent of the owner or other authorized person.A nondisclosure agreement (NDA) is important because it provides the owner of confidential information the legal protection they require against the possibility of that information being disclosed to other parties without **permission**.

A **nondisclosure** agreement (NDA) may also be used to protect business information from being misused by employees or **former employees**.Example of a nondisclosure agreement (NDA)A nondisclosure agreement (NDA) could be a short, simple document that is signed by two parties. The following is an example of a nondisclosure agreement (NDA):"I, the undersigned, agree to keep the confidential information I receive from (owner's name) private and confidential.

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Explain your answer and/or show your work to receive full credit. 1. True or False. Explain your answer. a. A price elasticity of demand of 2 for a specific cola means that if the price increases 10 percent, the quantity demanded of the cola will decrease by 2 percent. b. A price elasticity of demand−2for a specific cola means that if the price increases 1 percent, the quantity demanded of the cola will decrease by 2 percent.

### Answers

a. True.

A price **elasticity **of demand of 2 means that a 1% increase in price will lead to a 2% decrease in quantity demanded. So, if the price increases by 10%, the quantity demanded will decrease by 2% (10% **multiplied **by 2).

b. False. A price elasticity of demand of -2 means that a 1% increase in price will lead to a 2% decrease in **quantity **demanded. In this case, if the price increases by 1%, the quantity demanded will decrease by 2% (1% multiplied by -2).

Price elasticity of demand measures the **responsiveness **of quantity demanded to changes in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.

a. In the first scenario, the price elasticity of demand is 2. This means that if the price increases by a certain percentage, say 10%, the quantity demanded will decrease by twice that percentage, which is 2 times 10% or 20%. The elasticity of 2 indicates that the demand for the cola is relatively elastic, meaning **consumer **are responsive to changes in price.

b. In the second scenario, the price elasticity of demand is -2. A negative elasticity implies an inverse relationship between price and quantity demanded. If the price increases by 1%, the quantity demanded will decrease by 2%, as the **negative **elasticity coefficient magnifies the impact of price changes. This elasticity of -2 indicates that the demand for the cola is relatively elastic, similar to the first scenario.

Overall, the s to both parts are consistent with the concept of price elasticity of demand, where a higher absolute value of elasticity implies a more responsive demand to price changes.

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If we apply positive financial leverage to a typical real estate proforma what results would we expect would happen with our equity returns (as measured by IRR)?

a) Higher leverage, higher returns on equity

b) Higher leverage, higher returns up to a point, then lower returns

c) Hgher leverage, lower equity returns

d) Leverage will not affect equity returns

### Answers

The correct answer is b) Higher leverage, higher returns up to a point, then** lower** returns.

The correct answer is b)** Higher leverage, **higher returns up to a point, then lower returns.

Positive financial leverage refers to the use of borrowed funds to increase the potential return on investment. In the context of real estate, this typically involves taking on debt to finance a property acquisition or development.

When you apply positive** financial** leverage to a real estate proforma, the returns on equity, as measured by the Internal Rate of Return (IRR), tend to increase initially as you increase the leverage.

This is because the borrowed funds amplify the returns generated by the equity investment. With higher leverage, a smaller amount of equity is required to finance the project, and any gains realized are spread across a smaller equity base, resulting in a higher return on equity.

However, there is a point at which the benefits of increased leverage start diminishing. As the leverage becomes too high, the risk associated with the debt also increases.

Higher debt levels mean higher interest expenses and principal **repayments**, which can eat into the cash flow generated by the property. If the property's cash flow is insufficient to cover these obligations, the equity returns can start to decline. This is particularly true in periods of economic downturns or when property values decrease.

Therefore, while higher leverage initially boosts equity returns, there is a threshold beyond which additional leverage can lead to lower returns or even losses. It's important to carefully consider the risks and potential downsides of increased leverage when analyzing real estate investments.

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Shield Corp. expects an earnings per share of $2.38 and reinvests 30% of its earnings. Management projects a rate of return of 5% on new projects and investors expect a 5% rate of return on the stock. What is the sustainable growth rate? Enter your answer as a percentage. Do not include the percentage sign in your answer.

Enter your response below rounded to 2 DECIMAL PLACES.

### Answers

The **SGR **of the **company **is** **5 per cent

Given, Earnings per share (EPS) = $2.38

**Reinvestment rate** = 30%

Rate of return (ROR) on new projects = 5%

Investor's expected rate of return = 5%

The sustainable growth rate (SGR) is the maximum rate at which a company can grow without having to increase its financial leverage or its debt-to-equity ratio. The formula for sustainable growth rate is

SGR = Retention ratio × ROE, where Retention ratio = 1 − Dividend payout ratio.ROE is Return on Equity which is calculated as Net Income/Equity. In other words, the return that the company generates on shareholders’ equity.

Now, Dividend payout ratio = (1 – Retention ratio)To find out the Retention ratio:

Retention ratio = 1 - Dividend payout ratio

Retention ratio = 1 - 0

Retention ratio = 1

So, the formula for SGR can be simplified as

SGR = ROE × 1SGR = ROE

The return on equity can be expressed as:

ROE = Net Income/Equity Net Income is equal to earnings per share (EPS) × Number of shares outstanding.

Equity is equal to book value per share (BVPS) × Number of shares outstanding. The formula becomes

ROE = (EPS × Number of shares outstanding) / (BVPS × Number of shares outstanding)ROE = EPS / BVPSROE = $2.38 / BVPSWe know that the company reinvests 30% of its earnings. Therefore, **Dividend **payout ratio = 1 – Retention ratio = 1 – 0.3 = 0.7BVPS can be calculated as:

BVPS = (Total equity – Preferred equity) / Number of shares outstandingBVPS = (Total equity / Number of shares outstanding) – (Preferred equity / Number of shares outstanding)Total equity can be calculated as

Total equity = Number of shares outstanding × Price per shareWe know that **investors** expect a 5% rate of return on the stock. Therefore, the price per share can be calculated as

Price per share = EPS / Required rate of return

Price per share = $2.38 / 5%

Price per share = $47.60

Now,Total equity = Number of shares outstanding × Price per share total equity = 100,000 × $47.60

Total equity = $4,760,000

Preferred equity is not given, so it can be assumed that it is zero.

BVPS = (Total equity – Preferred **equity**) / Number of shares outstanding

BVPS = $4,760,000 / 100,000BVPS = $47.60

ROE = $2.38 / $47.60

ROE = 0.05 or 5%

Therefore, SGR = ROE × 1SGR = 5%

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When the population standard deviation is unknown and the sample size is less than 30 what table value should be used in computing a confidence interval for a mean?

### Answers

When the population standard deviation is unknown and the sample size is less than 30, the **t-distribution **table values should be used in computing a confidence interval for a mean.What is the t-distribution?A t-distribution is a type of probability distribution that is used in statistics.

The t-distribution is used when the sample size is small or the population standard deviation is unknown. The t-distribution is used instead of the standard normal distribution when computing a confidence interval for a mean. A confidence interval is a range of values that is used to estimate a population **parameter.**The t-distribution table is used in computing a confidence interval for a mean when the population standard deviation is unknown and the sample size is less than 30.

The t-distribution is a family of probability distributions. The t-distribution table is used to look up the values of t that **correspond **to a certain level of significance and degrees of freedom. The degrees of freedom depend on the sample size and are equal to n - 1, where n is the sample size.

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Use the following assumptions to calculate the net service charge:

Collected balance = $200,000

RRR = 10%

ECR = 2%

D = 30

Service charge = $500

Select one:

a.

$171.23

b.

$204.11

c.

$295.89

d.

$328.77

### Answers

After performing the calculations, the **net service **charge is approximately a. $171.23.

To calculate the net service charge, we need to subtract the reserve requirement and the earnings **credit **from the service charge.

Given:

Collected balance = $200,000

RRR (Reserve Requirement Ratio) = 10%

ECR (Earnings Credit Rate) = 2%

D (Number of days) = 30

Service charge = $500

1. Calculate the reserve requirement:

Reserve Requirement = Collected **balance *** RRR

Reserve Requirement = $200,000 * 10% = $20,000

2. Calculate the earnings credit:

Earnings Credit = Collected balance * ECR * (D/365)

Earnings Credit = $200,000 * 2% * (30/365)

3. Calculate the net service charge:

Net Service Charge = Service charge - Reserve Requirement + **Earnings **Credit

Net Service Charge = $500 - $20,000 + ($200,000 * 2% * (30/365))

Now, let's calculate the net service charge:

Net Service Charge = $500 - $20,000 + ($200,000 * 2% * (30/365))

After performing the calculations, the net service charge is approximately $171.23.

Therefore, the correct answer is:

a. $171.23

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