BUSINESS COLLEGE

The Delta Co. owns retail stores that market home building supplies.​ Largo, Inc. builds single family homes in residential developments. Delta has a beta of 1.22 and Largo has a beta of 1.34. The riskminus free rate of return is 4 percent and the market risk premium is 6.5 percent. What should Delta use as their cost of equity if they decide to purchase some land and create a new residential​ community?

Answers

Answer 1
Answer:

Answer:

12.71%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 4% + 1.34 × 6.5%

= 4% + 8.71%

= 12.71%

The (Market rate of return - Risk-free rate of return)  is also called market risk premium and the same is used in the computation part. We ignored the bets of Delta

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A trustworthy friend asks to borrow money from you today. She promises to pay you exactly $3500 in 2 years, and she insists on your earning the same interest rate on your loan to her as you would have earned keeping your money in your savings account that earns 2%. How much can you lend her today
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Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 300. Store A purchases the product for $10 each unit and sells each for $25. Inventory is salvaged for $5. What is its maximum profit? $12,500 $8000 $5000 $7500

Answers

Answer:

maximum profit = 10500

Explanation:

The newsvendor model is a statistical model used to manage inventory and determine the appropriate amount of inventory. So first of all we determine the optimal inventory level then we use it to find maximum profit. In order to determine optimal inventory level we first have to find possible variability in demand, for that we use the critical fractile formula which is as follows:

f= cu/cu+co

cu= underage cost = price - cost = $25 -$10 = $15

co= overage cost = cost - salvage value = $10 -$5 = $5

f= 15/15+5

f= 0.75

If we look at the standard normal cumulative distribution table 0.75 is equal to z= 0.67.

Q = Mean+ (z* standard deviation)

Optimal inventory = 500 + (0.67* 300)

Optimal inventory = 701 units

WE ROUND OFF THE UNITS TO 700.

Now we calculate maximum profit as follows:

maximum profit = contribution * Q

maximum profit = ($25 - $10) * 700

maximum profit = 10500

Josh and Alex work as design engineers creating high-end lighting fixtures. After one particularly enlightened afternoon, they decide to follow their dreams and open a cupcake bakery. Please sort their various costs, listed below, into the correct category.a. Implicit Costs b. Not a Cost c. Explicit Costs1. The garage space used for baking that can no longer be rented to a college student2. Advertising space taken out on a social media network

3. Supplies like sugar, butter, and baking trays

4. The money they pay their neighbor's six year old son to deliver cupcakes to their customers

5. The salary Alex earned in his previous job designing light fixtures

Answers

Answer:

1. The garage space used for baking that can no longer be rented to a college student - implicit costs

Implicit costs are the opportunity costs, or in other words, what they give up to run the cupcake bakery. In this case, they are giving up on the rent they would get.

2. Advertising space taken out on a social media network - explicit costs

Explicit costs are monetary cost. To advertise on social media, they probably have to pay. In case they can advertise for free, then, this is not a cost.

3. Supplies like sugar, butter, and baking trays - explicit costs

Supplies have to be paid for with money, for these reason, they represent an explicit cost.

4. The money they pay their neighbor's six year old son to deliver cupcakes to their customers - explicit costs

Wages are also explicit costs because they have to be paid for with money. In this case, the kid is like their employee, and the money he earns is his wage.

5. The salary Alex earned in his previous job designing light fixtures - implicit costs

Alex quit his job to run the cupcake bakery instead. The salary he used to earn is something that he has given up, or an opportunity cost. Therefore, this salary represents an implicit cost.

Slapshot Company makes ice hockey sticks. Last week, direct materials (wood, paint, Kevlar, and resin) costing $28,000 were put into production. Direct labor of $28,000 (10 workers x 100 hours x $28 per hour) was incurred. Manufacturing overhead equaled $55,000. By the end of the week, the company had manufactured 5,600 hockey sticks.1.Calculate the total prime cost for last week.$2. Calculate the per-unit prime cost. Round your answer to the nearest cent.$ per unit3. Calculate the total conversion cost for last week.$4. Calculate the per-unit conversion cost. Round your answer to the nearest cent.$ per unit

Answers

Answer:

Part 1. Calculate the total prime cost for last week

Direct materials                    28,000

Add Direct labor                   28,000

Prime Cost                             56,000

Part 2. Calculate the per-unit prime cost

per-unit prime cost=$56,000/5,600

                                 =$10.00

Part 3. Calculate the total conversion cost for last week

Direct labor                                 28,000

Add Manufacturing Overheads 55,000

Total conversion cost                83,000

Part 4. Calculate the per-unit conversion cost.

per-unit conversion cost=$83,000/5,600

                                         =$14.82

Explanation:

Part 1. Calculate the total prime cost for last week

Prime Cost = Direct Materials + Direct Labor

Part 2. Calculate the per-unit prime cost

Per Unit Prime Cost = total prime cost/number of units manufactured

Part 3. Calculate the total conversion cost for last week

Conversion Cost = Direct Labor + Manufacturing Overheads

Part 4. Calculate the per-unit conversion cost.

Per-unit conversion cost =Total Conversion Cost / number of units manufactured

Final answer:

The total prime cost last week was $56,000, and the per-unit prime cost was $10. The total conversion cost was $83,000, and the per-unit conversion cost was $14.82.

Explanation:

The prime cost is calculated by adding the costs of the direct materials and direct labor. Therefore, the total prime cost for Slapshot Company last week was $28,000 (direct materials) + $28,000 (direct labor) = $56,000.

The per-unit prime cost is calculated by dividing the total prime cost by the number of units produced. Therefore, it is $56,000 ÷ 5,600 hockey sticks = $10 per unit (rounded to the nearest cent).

The conversion cost is calculated by adding the cost of direct labor and manufacturing overhead. Therefore, the total conversion cost last week was $28,000 (direct labor) + $55,000 (overhead) = $83,000.

The per-unit conversion cost is calculated by dividing the total conversion cost by the number of units produced. Therefore, it is $83,000 ÷ 5,600 hockey sticks = <-strong>$14.82 per unit (rounded to the nearest cent).

Learn more about Cost Calculation here:

brainly.com/question/34783456

Vilas Company is considering a capital investment of $183,600 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $10,557 and $51,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment.Required:
a. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.)
b. Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 10.52%)
c. Using the discounted cash flow technique, compute the net present value.

Answers

Answer:

Payback period    = 3.6  years

Annual rate of return = 11.50%

NPV  = 243.59  

Explanation:

The payback period: The estimated number of years it will take the initial cost to be recouped.

Payback period= initial cost/ Net cash inflow

                          = 183,600/51,000

                         = 3.6  years

Annual rate of return is the average annual income as a percentage of average investment

Annual rate of return = annual net income/ average investment

Average investment =( Initial,cost + scrap value)/2

                                 = (183,600 + 0)/2 = 91,800

Annual rate of return = (10,557/91,800)× 100

                                   = 11.50%

Net Present Value = The present value of cash inflow less the initial cost

PV of cash inflow = A × (1- (1+r)^(-n))/r

                             = 51,000 × (1- (1.12)^(-5)/0.12

                             =  183,843.59  

NPV = 183,843.59 - 183,600

       = 243.59  

What is the​ government's policy on collusion in the United​ States? Explain the rationale for this policy. In the United States A. the government makes collusion legal with antitrust laws because monopolies create no deadweight loss.

B. the government makes collusion unnecessary with​ government-imposed barriers to entry because monopolies enhance economic efficiency.

C. the government encourages collusion with subsidies because resulting profits can be used to develop new products.

D. the government promotes collusion with the Federal Trade Commission because perfectly competitive markets enhance economic efficiency.

E. the government makes collusion illegal with antitrust laws because monopolies reduce economic efficiency.

Answers

Answer:

The correct answer is letter "E": the government makes collusion illegal with antitrust laws because monopolies reduce economic efficiency.

Explanation:

Antitrust laws regulate competition between companies. To protect consumers from price manipulation and unfair competition by making sure trade remains unrestrained. When businesses conspire to turn competition to their favor, they violate antitrust laws.

Those regulations prohibit business practices such us monopolies since those types of organizations take control over a certain market, making almost impossible the entry of competitors and consumers have fewer choices and higher prices.

On January 1, Song Corp. receives a $100,000, two-year, note receivable from a customer in exchange for payment of goods. The note has a 12% effective interest rate. On December 31, when Song records interest for the year, Song will record

Answers

Answer:

$9,566.33  

Explanation:

We need to determine the present value of the notes receivable using the pv excel function below:

=-pv(rate,nper,pmt,fv)

rate is the interest rate of 12%

nper is the number of years before the amount on the note is received which is 2 years

pmt is the amount of fixed interest(there is no fixed interest in this case)

fv is the future value of the loan in year 2 i.e $100,000

=-pv(12%,2,0,100000)=$79,719.39  

Now,after a year 12% interest is applied to the pv:

interest=$79,719.39 *12%=$9,566.33  
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