The amount in the retirement account in 25 years is $456,492.67.
Estimating the amount:
Since the $390 monthly deposit, Here, the interest rate is 8% each month. Furthermore, the duration is 25 years.
Here, we've used the formula for the annuity's future value.
[tex]FVA = C[\frac{[(1 + r)^{t-1}]}{r} ][/tex]
[tex]FVA = 390[\frac{[(1 + (\frac{0.08}{12} ))^{(25 \;*\;12)-1}]}{\frac{0.08}{12}} ][/tex]
[tex]FVA = 390[\frac{[(1 + (\frac{0.08}{12} ))^{300-1}]}{\frac{0.08}{12}} ][/tex]
FVA = $456,492.67
Thus, The amount in the retirement account in 25 years is $456,492.67.
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mansfield pharmaceuticals markets zipro, an antibiotic. the firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. what is the break-even volume?mansfield pharmaceuticals markets zipro, an antibiotic. the firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. what is the break-even volume?
125,000
Fixed Costs/ (Price-Variable Cost)
1,000,000/ (10-2)
=125,000 units is the break-even volume.
In arithmetic, a variable is a symbol and placeholder for any mathematical item. Especially, a variable can also constitute a number, a vector, a matrix, a feature, the argument of a function, a set, or a detail of a hard and fast. Algebraic computations with variables as though they had been specific numbers resolve various troubles in a single computation. As an example, the quadratic formulation solves any quadratic equation with the aid of substituting the numeric values of the coefficients of that equation for the variables that constitute them in the quadratic system. In mathematical common sense, a variable is either an image representing an unspecified term of the theory (a meta-variable) or a primary item of the theory this is manipulated without referring to its possible intuitive interpretation.
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a company currently has sales of $700,000 and a contribution margin ratio of 45%. as a result of increasing advertising expense by $8,000, the company expects to increase sales to $735,000. if this is done and these results occur, net operating income will blank . multiple choice question. increase by $7,750 increase by $15,750 decrease by $12,250 decrease by $8,000
If this is done and these results occur, net operating income will increase by $7750.
Net operating income using this formula
Net operating income=(Expected Increase in sales-Current sales× Ratio-Advertising expenses)
Net operating income = $735,000 - ($700,000 x 45%) - $8,000
Net operating income= $7,750 increase
Therefore, net operating income will increase by $7750.
What is net operating income?A technique used by real estate professionals to swiftly determine the profitability of a certain investment is called net operating income, or NOI. Following the deduction of necessary operational expenses, NOI calculates the revenue and profitability of invested real estate property.
Since EBIT covers non-operating income, non-operating expenses, and other income, it stands out from operating income as the primary distinction. Since EBIT displays a company's net income less the cost of interest on debt and tax charges, it is frequently used as a substitute for net income.
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the dahlia flower company has earnings of $3.64 per share. if the benchmark pe for the company is 18, how much will you pay for the stock? note: do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. if the benchmark pe for the company is 21, how much will you pay for the stock?
If the benchmark PE for the company is 18, you will pay $65.12 for the stock. If the benchmark PE for the company is 21, you will pay $76.44 for the stock.
What is stock?
Stock (also known as capital stock) in the financial industry refers to the shares into which ownership of the a company or corporation is divided. A single share of stock represents a fractional ownership interest in the company based on the total number of shares. This generally entitles the shareholder to a certain percentage of the company's value, proceeds from the sale of company assets (after paying off all high ranking claims such as secured and unprotected debt), or voting rights, often allocating these in proportion to the amount of cash each stockholder has invested. Not all stock is created equal; for instance, some classes may be granted enhanced voting rights, voting rights without restrictions, or a preference for receiving profits or liquidation continues before or after other courses of shareholders.
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while paula likes the structure provided by the rational decision-making process, you caution her that it has some shortcomings. why is the rational decision-making process difficult to apply completely in many situations? check all that apply.
The rational decision-making process difficult to apply completely in many situations are:
Managers don't always assess situations rationally.
Administrators may not always have access to complete and accurate information.
Managers are limited by their own values and unconscious beliefs.
Rational decision-making uses objective data, logic, and analysis to solve problems or achieve goals, rather than subjectivity and intuition. Here's a step-by-step model to help identify the problem.
Rational decision-making is the opposite of intuitive decision-making. It is a rigorous procedure with objective knowledge and logic. It is about identifying problems to solve, gathering facts, identifying and analyzing options and outcomes, and considering all relationships to make decisions.
Rational decision-making is important. Because by cultivating an objective perspective, it provides a way to overcome the specific challenges we face and approach new opportunities.
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Some grocery stores offer gas discounts for every $100 spent on groceries, regardless of how long it takes to spend that amount. These grocery stores illustrate the use of a.
Some grocery stores offer gas discounts for every $100 spent on groceries, regardless of how long it takes to spend that amount. These grocery stores illustrate the use of a reward system.
What is a reward system?This is the term that is used to refer to the system of appreciation that the owners of a business would have to forward to the people that conduct business with them. The people make use of the reward system as a way of getting the consumers to keep coming.
Hence we would say that the use of the discount for the amount spent would be an example of a reward system.
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Match the items with their descriptions.
copyright owner
fair use of copyright materials
government publications
a life span of 20 years
use and display the copyrighted material
exempt from the Copyright Law
paraphrase articles for news reports
patents
Each of the items should be matched with the correct and appropriate descriptions as follows:
Government publications: a life span of 20 years.Copyright owner: use and display the copyrighted material.Fair use of copyright materials: exempt from the copyright law.Patents: paraphrase articles for news reports.What is copyright law?Copyright law simply refers to a set of formal rules and regulations that are granted by the government to protect an intellectual property (IP), especially by giving the creator or original author an exclusive right to use during his or her lifetime, while preventing any unauthorized access, unlawful use or duplication by other parties.
In this context, we can reasonably infer and logically deduce that a copyright grants a creator the exclusive right to use the creation during his or her lifetime, including the creator's heirs for 70 years after the creator's death.
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Government publications- a life span of 20 years. Copyright owner - use and display the copyrighted material. Fair use of copyright materials - exempt from the copyright law. Patents - paraphrase articles for news reports.
What is Government publications?A government publication is defined as "informational material issued as an individual document at Government expense, or as required by law" under the United States Code.
Census data, statistical information, reports, journal articles, Royal Commission findings, parliamentary documents, legislation, and legal citations are a few examples of government publications.
Thus, statements are match correctly above.
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at year end, a client informs her rr that her employer did not make a matching contribution into her 401(k) account this year. the rr should respond by stating that
An employer being a sponsor of a 401(k) plan is not required by law to make a make a matching contribution on behalf of their employees.
Elaborate on 401k plan.Many American firms provide 401(k) plans, which are retirement savings plans with favourable tax treatment for the saver. It bears a section number from the United States Internal Revenue Code (IRC).
When a worker enrolls in a 401(k), they consent to have a portion of each pay check put directly into an investing account. A portion or the entire contribution may be matched by the employer. The employee has a variety of investing alternatives, most often mutual funds. To encourage Americans to save for retirement, the US Congress created the 401(k) plan. Tax savings is one of the advantages they provide.
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when interest is compounded continuously: a) the cash flow must also occur continuously. b) the cash flow must be converted into continuous cash flow. c) the interest rate must be converted into an annual rate. d) none of the abov
The correct answer is d. When interest is compounded continuously the cash flow may not occur continuously.
Compound interest, often known as interest on principal and interest, is the adding of interest to the loan or deposit principal. Reinvesting interest, or restoring it to the lent capital instead of paying it out or requiring payment from the borrower, results in interest being earned on the principal amount plus already accumulated interest in the next period. In finance and economics, compound interest is common. In contrast to simple interest, which does not compound since past interest is not applied to the principal for the current period, compound interest allows interest to build over time.
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You need to write a check for $167. 50 from your checking account, which has a balance of $1,725. 25. What percent of your balance will remain?.
Percentage of the balance which will be remained is 90.29%
It is given that the balance is $1725.25
Check amount which has to written is $167.50.
Thus, the remaining balance after getting deducted will be $1725.25 - $167.5 = $1557.75
Percentage of the balance = (Remaining balance ÷ Total amount )×100
= ($1557.75 ÷ $1725.25) ×100
= (0.9029) ×100
= 90.29%
Thus, Percentage of the balance is 90.29%
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brian's friend will celebrate his birthday next week, so she needs to buy him a gift. she remembers the brand of watch that he wears and considers if he would like a new one by the same maker. this is an example of what part of the consumer purchase decision process?
The part of the customer purchase decision process is internal search. It is because Brian thinks that Brian's friend would like a new one by the same maker.
Decision-making in psychology can be defined as the cognitive process resulting in the selection of a belief or a course of action among several possible alternative options. Decision making could be either irrational or rational. There are two types in decision making, such as internal search and external search. Internal search can be defined as the acquisition of information that is and available in memory. External search can be defined as the acquisition of information from sources outside of memory.
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the cowboy shop has current liabilities of $151,200; cash in the amount $13,900; securities valued at $95,250; and accounts receivable of $157,300. calculate the acid test ratio.
(cash + security valued + account receivable) / current liabilities
= (13900 + 95250 + 157300) / 151200
= 1.76 : 1
The acid-test ratio is a form of liquidity ratio that gauges a company's capacity to use its available cash or quick assets to rapidly pay off or retire its current liabilities.
A company with a high or rising acid test ratio will have quicker inventory turnover and cash conversion cycles. This ratio appears when a company's top line is expanding, receivables are converted into cash fast, and obligations are readily met.
The stronger the ratio, the more liquid the company is and the healthier its overall finances are. If the ratio is 2, it means that the company's liquid assets are $2 more than its current liabilities, or $1.
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if actual aggregate output is less than potential output, then the: please choose the correct answer from the following choices, and then select the submit answer button. answer choices long-run aggregate supply curve will shift to the left. long-run aggregate supply curve will shift to the right. short-run aggregate supply curve will shift to the left. short-run aggregate supply curve will shift to the right.
The short-run aggregate supply curve swings to the right as nominal wages decline.
When the economy is on the short-run aggregate supply curve and to the right of the long-run aggregate supply curve, actual aggregate output will eventually equal potential output as nominal wages decline and the short-run aggregate supply curve shifts to the right.
Every economy experiences short-term fluctuations in GDP as it enters or exits recession.
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WILL GIVE POINTS I need help choosing a subject for this assignment
In the United States, business regulations have been evolving since the 1800s. Chose an aspect of federal regulation of business practices, such as workplace safety, finance reform, or consumer protection, and create a presentation that is a timeline identifying five key factors that contributed to the definition and implementation of the regulation as it is enforced today. You can go online and research significant regulations or legislation; many of the federal agency websites may be of value. For each one, including the following information:
Date it was passed
Circumstance that motivated it
Who it benefits and why
You can use the presentation software of your choice for this assignment. Make sure that you are using reputable websites and include a list of at least three appropriate websites at the end. Your presentation should be well organized, free of mechanical errors, and easy to read.
The tax (excise tax) is an example of federal regulation of business practices.
Why was the Excise tax set up?The United States Constitution established tariffs and excise taxes, and Alexander Hamilton, the country's first secretary of the Treasury, suggested using them to charge foreign imports in 1789.
The people that benefit from the excise tax is the government. It was said to be first set up for revenue generation. When compared to other options like income taxation, excise taxes may provide large government revenue at a lower political or economic cost.
Therefore, One of the most prevalent taxation methods used by the federal government is the excise tax. This also holds true for particular products or services like alcohol, tobacco, and gasoline. This can also be accomplished by increasing prices for consumers in order to pass on the tax expense.
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suppose your monthly net income is $2,400. your monthly debt payments include your student loan payment and a gas credit card. they total $360. what is your debt payments-to-income ratio?
Debt payments-to-income ratio is 3 : 20.
What is a debt?Debt is money you owe and credit is money you can borrow. You create debt by borrowing money on credit. Borrowed: Obligation unable to pay his debt. The most important types of personal debt are secured debt, unsecured debt, revolving debt and mortgages. Secured debt requires some form of guarantee, while unsecured debt is based solely on personal creditworthiness. A debt is a financial obligation or obligation owed by one person, the debtor, to another creditor.A loan (creditor or lender) to repay that money.To learn more about debt from the given link :
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what is a bond's accrued interest?multiple choice question.it is additional interest that the firm must pay if interest checks are mailed late.it is the difference between the coupon rate and market rate of interest.it is interest that has been received but not yet earned.it is interest that has been earned but not yet received by the current bondholder.
Interest on a bond that has accrued but has not yet been paid to the current bondholder.
The interest that accumulates (accrues) every day between coupon payments is known as accrued interest. You will probably buy a bond between coupon payment dates if you sell it before it expires or purchases it on the secondary market.
It is determined by multiplying the principle amount by the interest rate, the number of days the debt is given or taken, and the number of days in a year. After that, the result is divided by 365.
The buyer of a bond pays the seller the accumulated interest; the issuer is not involved in the transaction. Bonds will always cost more than the listed price since the cumulative interest payment is added to the market price.
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Marginal cost _____ over the range of increasing marginal returns and _____ over the range of diminishing marginal returns.
Decreases; increases.
Since marginal cost and product have an inverse relationship, marginal product will always be at its peak right when marginal cost is at its lowest. The inverse is also true, with marginal product reaching its lowest point while marginal cost rises to its highest point.
When marginal returns rise, what happens?When labor is increased by one unit while keeping all other inputs constant, the marginal product of labor calculates the change in output. Since specialization enables former employees to concentrate more on certain activities, which can boost efficiency, it is an indication that specialization is taking place when the marginal return to labor is increasing.When marginal returns are increasing, marginal cost decreases, and when marginal returns are declining, it increases. The marginal physical product of work has a relationship with marginal returns. When more units of input are used, the total output increases at a rising rate, this is known as increasing marginal returns.To learn more about Marginal returns refer to:
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currently, which type of financial institution in the primary mortgage market provides the most funds for the residential (owner-occupied) housing market?
Financial institution in the primary mortgage market provides the most funds for the residential (owner-occupied) housing market is Commercial bank.
What is Commercial bank?The term commercial bank accepts deposits, provides checking account services, issues various loans, and provides basic financial products such as certificates of deposit (CDs) and savings accounts for individuals and small businesses. A commercial bank is a financial institution that performs the function of accepting deposits from the general public and lending money for investment, with the aim of making a profit. In fact, commercial bank, as the name suggests, exclude commercial institutions.They bank to make a profit. Commercial bank can be further classified into public sector banks, private sector banks, foreign banks and regional regional banks (RRBs). On the other hand, credit unions are divided into urban and rural areas. That said, payment banks are a fairly recent addition to the structure.To learn more about commercial bank from the given link :
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in the normative decision model, if a leader is pressed for time in making a decision, but has several options for making the decision as determined by the decision tree, the leader should
The leader must make his own decisions when there is no time, he has all the information needed, the leader has the support of the group, or the followers cannot agree among themselves on an action. In other situations, leaders must rely on participation to varying degrees.
Leadership is an ability or strength within a person to lead and influence others in terms of work, where the goal is to achieve predetermined targets. While the notion of a leader is someone who is trusted as the chairman (head) in a system in an organization/company. That way, a leader must have the ability to guide and influence a person or group of people.
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madsen motors's bonds have 12 years remaining to maturity. interest is paid annually, they have a $1,000 par value, the coupon interest rate is 12%, and the yield to maturity is 14%. what is the bond's current market price? round your answer to the nearest cent.
Market Value of the Bond is $304 when bonds have 12 years remaining to maturity and interest is paid annually, they have a $1,000 par value.
According to given data
Assuming the Face value of the bond is $1,000
Coupon payment = C = $1,000 x 12% = $120 annually
Number of periods = n = 12 years =
Current Yield = r = 14% / 2 = 7% semiannually
Market Value of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ $1,000 / ( 1 + r )^n ]
Market Value of the Bond = $120 x [ ( 1 - ( 1 + 14% )^-12 ) / 14% ] + [ $1,000 / ( 1 + 14% )^12 ]
Market Value of the Bond = $96 + $ 208= $304
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most home insurance policies cover jewelry for $1,000 and silverware for $2,500 unless the items are covered by additional insurance. if $4,470 worth of jewelry and $3,660 worth of silverware were stolen from a family, what amount of the claim would not be covered by insurance?
The claim amount is $4,630, which is not covered by insurance.
What is claim amount?The sum payable at the maturity of an insurance policy or upon the death of the person insured to the beneficiary, nominee, or legal heir of the insured is known as the claim amount. The actual loss incurred by the Insured with respect to a Loan as calculated in accordance with Section V is referred to as the Claim Amount. Claim = Loss Suffered x Insured Value/Total Cost The goal of such an Average Clause is to limit the Insurance Company's liability. A Claim Payment is an amount paid to you under the Policy to compensate you for credit losses caused by unpaid insured receivables.Therefore,
The insurance company will pay the greater of the claim amount or the insurance coverage limit for each item. Because the values of the stolen jewelry and silverware exceed their individual coverage limits, the insurance company will pay the $1,000 for jewelry and $2,500 for silverware coverage limits.
Amount not covered by insurance = ($4,470 - 1,000) + ($3,660 - 2,500)
= 3,470 + 1,160
= $4,630
which of the following would cause the demand for loanable funds to increase? a major sporting event in town that causes people to withdraw money from their bank accounts. a new investment tax credit for businesses to expand. a reduction in consumer confidence that causes people to save more. a reduction in government spending.
A new investment tax credit for businesses to expand would cause the demand for loanable funds to increase.
If the passage of an investment tax credit makes firms to invest more, the demand for loanable funds would increase. As a result, the equilibrium interest rate would rise, and the higher interest rate would stimulate saving.
This diminish will cause a negligible diminish within the motivation to save (a diminish within the amount supply of loanable reserves).
But, as the intrigue rate diminishes, the taken toll of borrowing will diminish as well causing an increment within the amount requested of loanable reserves as they are presently cheaper.
On the other hand, the supply of loanable reserves is decided by the readiness of family units to spare in expansion to the reserve funds, or dissaving, of the government. When family units spare more nowadays, they are too diminishing their current levels of utilization.
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the difference between what the total sales should have been, given the actual level of activity for the period, and the actual total sales is a(n) variance.
The difference between what total sales should have been given the actual level of activity for the period and the actual total sales is a revenue variance.
What do we know as revenue variance?Basically, a revenue variances is an accounting tool that is used to measure the difference between expected and actual sales. This information are often needed to determine the success of an organization's selling activities and the perceived attractiveness of its products. There are three types of revenue variances which can be used to develop insights into the reasons why actual sales differ from expectations, they include the Sales Volume Variance, Selling Price Variance and Sales Mix Variance.
Most time, the typical favorable revenue variance occurs when the actual revenues exceed budgeted revenues while the opposite is true for an unfavorable variance. Therefore, the revenue variance results from the differences between budgeted and actual selling prices, volumes or a combination of the two.
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storico currently has 24,000 shares outstanding that sell for $46.49 per share. the company plans to issue a stock dividend of 20 percent. how many new shares will be issued?
New shares = 21,000(.125)New shares = 2,625 shares. A share is a unit used in mutual funds, limited partnerships, and real estate investment trusts in the financial markets. The term "share capital" describes all of an organization's shares.
What is shares?A share is a unit used in mutual funds, limited partnerships, and real estate investment trusts in the financial markets. The term "share capital" describes all of an organization's shares. A corporation's shareholder is someone who owns shares in the business.
Shares are fractional ownership interests in a corporation. For some businesses, shares are a type of financial instrument that allows for the equitable distribution of any declared residual profits in the form of dividends. A stock with no dividend payments does not distribute its income to its shareholders.
Shares signify ownership in a corporation. An individual becomes a shareholder in your business when they purchase shares.
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when asked, owners and managers of small hospitality businesses might say they know that their employees need training whenever they hear guests complain. the principal advantage of soliciting guest feedback as a means of training needs assessment is that:
Principal advantage of soliciting guest feedback as a means of training needs assessment is that it demonstrates a property's commitment to service.
Feedback happens when a system's outputs are used as inputs again as part of a cause-and-effect circuit or loop. [1] It can thus be claimed that the system feeds back on itself. Simple causal inference concerning a feedback system is challenging because the first system affects the second, which affects the first, creating a circular argument. Offering money to someone with the express purpose of persuading them to commit a crime is the incipient crime of soliciting. Despite being on private property, door-to-door soliciting is permitted in the United States. Traveling salespeople's freedom of speech for business purposes has been upheld by the Supreme Court's decision that they had a constitutional right to be there.
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casey deesel is a sports agent negotiating a contract for titus johnston, an athlete in the national football league (nfl). an important aspect of any nfl contract is the amount of guaranteed money over the life of the contract. casey has gathered data on 506 nfl athletes who have recently signed new contracts. each observation (nfl athlete) includes values for percentage of his team's plays that the athlete is on the field (snappercent), the number of awards an athlete has received recognizing on-field performance (awards), the number of games the athlete has missed due to injury (gamesmissed), and millions of dollars of guaranteed money in the athlete's most recent contract (money, dependent variable). casey has trained a full regression tree on 304 observations and then used the validation set to prune the tree to obtain a best-pruned tree. the best-pruned tree (as applied to the 202 observations in the validation set) is:
Based on the available data for a player of Titus Johnston's profile, his guaranteed amount would be $32.74 million.
Calculations and ParametersGiven that Casey Deeselis a sports agent negotiating a contract for Titus Johnston, an athlete in the National Football League
He has generated data on 506 NFL athletes who have recently signed new contracts and who get paid a percentage of his team's plays that the athlete is on the field.
With this, each award they get, each minute they spend on the field, each game missed, and then guaranteed money are all accounted for which is displayed in the attached image below.
If we observe the best-pruned tree given below, based on the arrows and circles,
For Snap percent = 96
Awards = 7
Games missed = 3
The conclusion is that with the profile of Titus Johnston, he would receive a guaranteed amount of $32.74 million.
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how has persuasion changed in the digital age? check all that apply. persuasive messages are targeted to very specific audiences persuasion is more complex and impersonal all businesses are in the persuasion business persuasive messages are slow to engage audiences persuasive techniques are more subtle and misleading
Persuasion is more complicated and impersonal, and persuasive techniques are more deceptive. The number and reach of persuasive communications have exploded.
How persuasion works?
These are the traits of the persuasion in the digital era that they create changes. Persuasion is one of the marketing strategies that merely draws customers in to make purchases of the goods or items. Persuasion has become a more delicate and vital art form in our digital age.
One of the most efficient ways to influence people's opinions is through persuasion, which also expands the audience's diversity more quickly. The mechanics of the proposed persuasion fundamentally alter the modern era.
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lucie is reviewing a project with an initial cost of $38,700 and cash inflows of $9,800, $16,400, and $21,700 for years 1 to 3, respectively. should the project be accepted if it has been assigned a required return of 9.75 percent? why or why not? a) yes; because the irr exceeds the required return by .34 percent b) yes; because the irr is less than the required return by .28 percent c) yes; because the irr exceeds the required return by .28 percent d) no; because the irr exceeds the required return by .34 percent e) no; because the irr is only 9.69 percent
Yes, because the IRR is .34 percent higher than the required return.
What is initial cost?The total cost of purchasing an asset is referred to as the original cost. The original cost of an asset takes into account all of the costs associated with its acquisition and use. The average cost of purchasing or manufacturing your stock on hand is referred to as the initial cost. Here are some of the reasons why determining and establishing the initial cost of your stock is critical.The money required for the capital construction or renovation of a facility, or the construction of an addition, is referred to as the initial cost. Licensing and permits, insurance, office supplies, payroll, marketing costs, research expenses, and utilities are all examples of startup costs.Therefore,
Yes, because the IRR is .34 percent higher than the required return.
0 = −$38,700 + $9,800 / (1 + IRR) + $16,400 / (1 + IRR)2 + $21,700 / (1 + IRR)3;
IRR = 10.09% Excess return
= 10.09% - 9.75%
= .34%
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________ occurs when the supplier, rather than the retailer, manages the entire inventory process for a particular product or group of products, resulting in more effective inventory replenishment.
Vendor-managed inventory (VMI) occurs when the supplier, rather than the retailer, manages the entire inventory process for a particular product or group of products, resulting in more effective inventory replenishment.
Vendor Managed Inventory (VMI) is an inventory management practice in which a vendor of goods, usually a manufacturer, is responsible for optimizing the inventory that a distributor has. In traditional inventory management, retailers (sometimes we refer to as buyers or buyers) make their own decisions regarding the amount of goods they will order.
Whereas in VMI, retailers share their inventory data with vendors in such a way that it is the vendor who becomes the decision maker who determines the number of orders for goods for both. That way, the vendor is responsible for the retailer's ordering costs, while the retailer has to pay for the storage costs themselves.
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a stock is expected to pay the dividend of $1 per share in two months and in five months. the stock price is $50, and the risk-free interest rate is 8% per annum with continuous compounding for all maturities. what are the forward price and the initial value of a six-month forward contract on the stock?
The forward contract's initial value is 50.01 and its forward price is 1.9540.
Forward Contract: What is it?A forward contract is a sort of derivative in which the underlying asset is sold at a defined price and at a later time. The contract includes the writer and the buyer as the two parties. Interest, currency exchange rates, metal, stocks, etc. are examples of the underlying asset in a derivative contract.
Given:
Dividend = $1 per share
Stock price = $50
Risk-free rate = 8% per annum
Present value of income from security= ( dividend X [tex]e^{-risk- free interest rate X \frac{2}{12} }[/tex]) + (dividend X [tex]e^{-risk- free rate X \frac{5}{12} }[/tex] )
= ( 1 X [tex]e^{-0.08 X \frac{2}{12} }[/tex] ) + (1 X [tex]e^{- 0.08 X \frac{5}{12} }[/tex] )
= (1 X 0.98676) + (1 x 0.96722)
= 0.98676 + 0.96722
= 1.9540
Forward Price = (stock price - present value of income from security) X [tex]e^{- risk - free rate X \frac{6}{12} }[/tex]
= ( 50- 1.9540) X [tex]e^{-0.08 X \frac{6}{12} }[/tex]
= 48.046 X 1.041
= 50.01
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expected return american eagle outfitters (aeo) recently paid a $.44 dividend. the dividend is expected to grow at a 16.10 percent rate. at the current stock price of $24.67, what is the return shareholders are expecting? multiple choice 16.12% 18.17% 16.10% 17.92%
18.17% return the shareholders are expecting.
According to the constant dividend growth model
price = d1 / (r - g)
Next dividend to be paid=(0.44 x 1.1610)
Cost of equity= r
Growth rate=0.1610
24.67 = (0.44 x 1.1610) / (r - 0.1610)
24.67 x (r - 0.1610) = 0.51084
(r - 0.1610) = 0.02070
cost of equity, r= 0.2070+0.1610
cost of equity, r = 0.1817
= 18.17%
shareholders return expecting = 18.17%
A person or legal organisation that is officially recognised by a corporation as the owner of shares of the share capital of a public or private corporation is referred to as a shareholder.
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