The example of specific risk is "Consumer spending on movies decreased nationally". Other alternatives in the question do not relate to specific risk. Therefore, we can conclude that consumer spending on movies decreased nationally is an example of specific risk.
Specific risk, also known as unsystematic risk, is a risk that is inherent to a single company or asset rather than to the entire market. Specific risk is unique to a specific corporation or investment. For example, a business experiencing a decrease in customer demand because of a problem with a specific product. Specific risk can be mitigated or eliminated by diversifying an investment portfolio. As compared to systematic risk, specific risk can be reduced by diversification.Speculative risk involves a possibility of both gain and loss. It is typical for investors, as it requires taking chances and can result in a return on investment. For example, investing in an innovative start-up firm might result in a significant financial gain, or it could result in the complete loss of the investment. Diversification is one way to manage speculative risk. Diversification is the process of allocating funds in a way that reduces exposure to risk. The concept is that a portfolio that includes various types of investments will have a lower risk of a single investment causing harm to the entire portfolio. By including a range of different investment assets in a portfolio, investors may reduce the impact of unsystematic risks. The example of specific risk is "Consumer spending on movies decreased nationally." Other alternatives in the question do not relate to specific risk. Therefore, we can conclude that consumer spending on movies decreased nationally is an example of specific risk.For more such questions on specific risk , click on:
https://brainly.com/question/30609742
#SPJ11
Assume Evco, Inc. has a current stock price of $49.64 and will pay a $2.05 dividend in one year, its equity cost of capital is 11%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price?
The price at which you must expect Evco stock to sell for immediately after the dividend payment is $29.84.
What price must you expect Evco stock to sell immediately?To know price at which Evco stock must sell for immediately after the dividend payment to justify its current price, we canwill use the dividend discount model (DDM).
The DDM formula is as follows: Stock Price = Dividend / (Cost of Equity - Dividend Growth Rate)
Given:
Current stock price (P0) = $49.64
Dividend (D1) = $2.05
Equity cost of capital (Cost of Equity) = 11%
Dividend Growth Rate (g) = Dividend / Stock Price
Dividend Growth Rate (g) = $2.05 / $49.64
Dividend Growth Rate (g) = 0.0413
Substitute values into the DDM formula:
Stock Price = $2.05 / (0.11 - 0.0413)
Stock Price = $2.05 / 0.0687
Stock Price ≈ $29.84.
Read more about stock price
brainly.com/question/28539863
#SPJ4
Broadcom Inc is expected to have EPS of $2 and ROE of 0.1777 in the coming year. If the firm is expected to continue to retain 80% of earnings for the foreseeable future, what's the intrinsic value of the stock if the required return is 11%?
EPS = $2ROE
= 0.1777
Growth rate (g) = Retention rate * ROE80% * 0.1777
= 0.14216
Intrinsic value can be calculated using the Gordon growth model which is given as, Intrinsic value
(P) = D1 / (k - g)
Where,
D1 = Expected dividend per share
= EPS *
Payout ratio= $2 * (1 - 0.8)
= $0.4k
= Required rate of return
= 11%
= 0.11g
= Growth rate
= 0.14216
By substituting these values in the above formula, we get, Intrinsic value
(P) = 0.4 / (0.11 - 0.14216)
= $16.10
Therefore, the intrinsic value of the stock is $16.10 if the required return is 11%. Intrinsic value of a stock is the actual value of a stock which can be estimated by using the fundamental analysis. The Gordon growth model is one of the models that can be used to estimate the intrinsic value of the stock. The Gordon growth model is based on the assumption of constant dividend growth rate. The intrinsic value of the stock can be calculated as the present value of all future cash flows.
The formula for the Gordon growth model is as follows, Intrinsic value
(P) = D1 / (k - g)
Where,
D1 = Expected dividend per share
k = Required rate of return
g = Growth rate
Given,
Expected EPS = $2RO
E = 0.1777
Growth rate (g) = Retention rate *
ROE80% * 0.1777 = 0.14216
The payout ratio can be calculated as follows,
Payout ratio = 1
Retention rate= 1 - 0.8 = 0.2
The expected dividend per share (D1) can be calculated as follows,
D1 = EPS *
Payout ratio= $2 *
(1 - 0.8) = $0.4
The required rate of return (k) is 11% or 0.11.The intrinsic value of the stock (P) can be calculated as follows, Intrinsic value
(P) = D1 / (
k - g) = 0.4
(0.11 - 0.14216) = $16.10
Therefore, the intrinsic value of the stock is $16.10 if the required return is 11%.
To know more about Growth visit:
https://brainly.com/question/13870574
#SPJ11
Suppose a monopolist has the following cost function C(Q) = 50Q (with marginal cost MC = 50). Suppose it faces market demand of P = 200 – ¼ Q. (a) Sketch the market demand, marginal revenues, and marginal costs. Be neat. (b) What is the monopolist’s optimal level of output, price, and profits? Show your work. (c) What is the DWL associated with the monopoly output? Show your work. (d) (Cournot Competition) Now suppose we added a second firm that has identical costs to the monopolist. Show that the resulting Cournot Equilibrium has each firm producing output of 200 units. That is, show that, if the other firm sells 200 units, then the best you can do is also sell 200 units. (e) What are profits under Cournot Competition compared to the Monopoly case? Hint: be sure to discuss the market price. (f) What happens to the DWL under Cournot Competition relative to the Monopoly case? Explain why this happens.
Sketch the market demand, marginal revenues, and marginal costs: Market demand can be obtained by substituting the given value of MC in the equation: P = 200 – 1/4 Q. Therefore, the marginal revenue is calculated by taking the derivative of the demand function.
Hence, MR = 150 - Q/2. Marginal cost, which is constant, is given as MC = 50. The table below summarizes these calculations What is the monopolist's optimal level of output, price, and profits? Show your work:For the profit-maximizing quantity, the marginal revenue equals the marginal cost. Therefore, optimal output, price, and profits for the monopolist are Q* = 200, P* = 50, and Profit* = $0. c) What is the DWL associated with the monopoly output? Show your work:Deadweight loss (DWL) can be found by calculating the area of the triangle.
Here, the base is (200 - 0) = 200. The height of the triangle is (150 - 50) = 100. Therefore, DWL = (1/2) * 200 * 100 = 10000. d) (Cournot Competition) Now suppose we added a second firm that has identical costs to the monopolist. Show that the resulting Cournot Equilibrium has each firm producing output of 200 units. That is, show that, if the other firm sells 200 units, then the best you can do is also sell 200 units:Here, two firms have identical costs, so the total cost of production will be 2* 50 Q = 100Q.The total market demand is 200- 1/2 Q. Let q be the quantity produced by both firms, thus q = Q1+ Q2.
To know more about revenues visit :
https://brainly.com/question/27325673
#SPJ11
Margaret has a project with a $30,000 first cost that returns $5000 per year over its 14-year life.It has a salvage value of $3000 at the end of 14 years.If the MARR is 15 percent, what is the annual worth of this project? Click the icon to view the table of compound interest factors for discrete compounding periods when i=15% The annual worth of the project is$ (Round to the nearest cent as needed.)
To calculate the annual worth of the project, we need to find the present worth of the cash flows over the 14-year period.
The annual cash flow is $5,000, and the salvage value at the end of the 14th year is $3,000.
Using the formula for the present worth of an annual series, we can calculate the annual worth (AW) as follows:
[tex]\[AW = \text{{Present Worth of Annual Cash Flows}} + \text{{Present Worth of Salvage Value}}\][/tex]
The present worth of the annual cash flows can be calculated using the annual worth factor (A/P, i, n) from the table of compound interest factors. In this case, the interest rate is 15% (i) and the number of periods is 14 (n). The formula is:
[tex]\[\text{{Present Worth of Annual Cash Flows}} = \text{{Annual Cash Flow}} \times \text{{Annual Worth Factor}}\][/tex]
From the table, we find the annual worth factor for n = 14 and i = 15% to be 6.5663.
Substituting the values into the formula:
[tex]\[\text{{Present Worth of Annual Cash Flows}} = $5,000 \times 6.5663\][/tex]
Similarly, the present worth of the salvage value can be calculated using the present worth factor (P/F, i, n). In this case, the salvage value is received at the end of the 14th year. The formula is:
[tex]\[\text{{Present Worth of Salvage Value}} = \text{{Salvage Value}} \times \text{{Present Worth Factor}}\][/tex]
From the table, we find the present worth factor for n = 14 and i = 15% to be 0.2416.
Substituting the values into the formula:
[tex]\[\text{{Present Worth of Salvage Value}} = $3,000 \times 0.2416\][/tex]
Finally, we can calculate the annual worth by summing up the present worth of the cash flows:
[tex]\[AW = \text{{Present Worth of Annual Cash Flows}} + \text{{Present Worth of Salvage Value}}\][/tex]
Now we can substitute the calculated values:
[tex]\[AW = ($5,000 \times 6.5663) + ($3,000 \times 0.2416)\][/tex]
Calculating this expression will give us the annual worth of the project, rounding to the nearest cent as needed.
To know more about annual visit-
brainly.com/question/17173483
#SPJ11
Consider a trader who takes a long position in a six-month futures contract on the euro. The forward rate is $1.75 = €1.00; the contract size is €62,500. At the maturity of the contract the spot exchange rate is $1.65 = €1.00.
a. The trader has lost $625.
b. The trader has lost $6,250.
c. The trader has made $6,250.
d. The trader has lost $66,287.88
Consider a trader who takes a long position in a six-month futures contract on the euro. The forward rate is $1.75 = €1.00; the contract size is €62,500. At the maturity of the contract the spot exchange rate is $1.65 = €1.00. The correct option is "d. The trader has lost $66,287.88."
In this scenario, the trader takes a long position in a futures contract on the euro, which means the trader agrees to buy euros at a specified price in the future. The forward rate is $1.75 = €1.00, and the contract size is €62,500. At the maturity of the contract, the spot exchange rate is $1.65 = €1.00.
To calculate the trader's loss, we need to compare the forward rate with the spot exchange rate. The difference between the two rates multiplied by the contract size will give us the loss.
The difference between the forward rate and the spot exchange rate is $1.75 - $1.65 = $0.10. Multiplying this by the contract size of €62,500 gives us $0.10 * €62,500 = $6,250.
However, since the trader takes a long position, the loss is incurred by the trader. Therefore, the trader has lost $6,250.
Visit here to learn more about spot exchange rate:
brainly.com/question/4530462
#SPJ11
Sandhill Company purchased, on January 1, 2020, as a held-to-maturity investment, $69,000 of the 8%, 5-year bonds of Chester Corporation for $63,768, which provides an 10% return.
Prepare Sandhill’s journal entries for (a) the purchase of the investment, and (b) the receipt of annual interest and discount amortization. Assume effective-interest amortization is used.
(a) Journal entry for the purchase of the investment:
Jan 1, 2020 Held-to-Maturity Investment $63,768Cash: $63,768Dec 31, 2020 Interest Receivable: $5,520Discount Amortization: $732Cash: $4,788In the first step, Sandhill Company purchased $69,000 of the 8%, 5-year bonds of Chester Corporation as a held-to-maturity investment. The purchase price was $63,768, which provides a 10% return.
In the journal entry for the purchase of the investment (a), the Held-to-Maturity Investment account is debited for $63,768, representing the cost of the bonds. The Cash account is credited for the same amount, indicating the cash outflow for the purchase.
In the journal entry for the receipt of annual interest and discount amortization (b), the Interest Receivable account is debited for $5,520, representing the annual interest income earned on the investment. The Discount Amortization account is debited for $732, which represents the amortization of the discount on the bonds using the effective-interest method. Finally, the Cash account is credited for $4,788, reflecting the actual cash received from the interest payment after discount amortization.
Learn more about investment:
brainly.com/question/15105766
#SPJ11
While Mary Corens was a student at the University of Tennessee, she borrowed $12000 in student loans at an annual interest rate of 9%. If Mary repays $1500 per year, how long, to the nearest year, will it take her to repay the loan
If Mary Corens borrowed $12000 in student loans at an annual interest rate of 9% and repays $1500 per year it will take 8 years to repay the loan.
Given that Mary Corens borrowed $12,000 at an annual interest rate of 9% and is repaying $1,500 per year. The formula to find the number of years to repay a loan amount is given by:
PMT = (PV * r) / (1 - (1 + r) ^ (-n))
Where PV is the present value of the loan (the amount borrowed), r is the annual interest rate, n is the number of years it will take to repay the loan, and PMT is the fixed payment made each year to repay the loan.
Using this formula, we can find the value of n as follows:
PMT = (PV * r) / (1 - (1 + r) ^ (-n))
Solving for n:
(PV * r) / PMT = 1 - (1 + r) ^ (-n)
(PV * r) / PMT - 1 = -(1 + r) ^ (-n)
1 - (PV * r) / PMT = (1 + r) ^ (-n)
(1 - (PV * r) / PMT) ^ (-1) = (1 + r) ^ n
Taking log on both sides, we get:
n = log [(1 - (PV * r) / PMT) ^ (-1)] / log (1 + r)
n = log [(1 + (12,000 * 0.09) / 1,500) ^ (-1)] / log (1 + 0.09)
n = log [(1 + 0.09) ^ (-1)] / log (1.09)
n = log (0.9174) / log (1.09)
n ≈ 8.43
Thus, it will take Mary approximately 8 years to repay the loan. To the nearest year, the answer is 8.
Learn more about Interest rate:
https://brainly.com/question/25720319
#SPJ11
On January 1, 2021, Berkshire paid $100,000 for 8,700 shares of Occidental Petroleum common stock. The ownership in Occidental Petroleum is 10%. Berkshire does not have significant influence over Occidental Petroleum. Occidental Petroleum reported net income of $58,000 for the year ended December 31, 2021. Occidental Petroleum paid dividends of $1 per share on December 31, 2021. The fair value of the Papa stock on that date was $62 per share. What amount will be reported in the balance sheet of Berkshire for the investment in Occidental at December 31, 2021? Multiple Choice O $539,400. O $494,400. O $479,400. O $464,400.
The amount that will be reported in the balance sheet of Berkshire for the investment in Occidental at December 31, 2021, will be $539,400.
Berkshire paid $100,000 for 8,700 shares of Occidental Petroleum common stock on January 1, 2021, and the ownership in Occidental Petroleum is 10%. Berkshire does not have significant influence over Occidental Petroleum. Occidental Petroleum reported net income of $58,000 for the year ended December 31, 2021, and it paid dividends of $1 per share on December 31, 2021. The fair value of the Papa stock on that date was $62 per share.
The carrying value of the investment will be as follows:
Purchase cost $100,000 + Dividend $8,700 × $1 = $8,700 = $108,700Fair value of the investment = 8,700 shares × $62 per share = $539,400
The balance sheet is a financial statement that provides a picture of a company's financial position at a given time. The balance sheet, which is one of the key financial statements, lists the assets, liabilities, and owner's equity at the end of a period. Berkshire paid $100,000 for 8,700 shares of Occidental Petroleum common stock on January 1, 2021, and the ownership in Occidental Petroleum is 10%. Berkshire does not have significant influence over Occidental Petroleum. The amount that will be reported in the balance sheet of Berkshire for the investment in Occidental at December 31, 2021, will be $539,400.
The carrying value of the investment will be as follows:
Purchase cost $100,000 + Dividend $8,700 × $1 = $8,700 = $108,700Fair value of the investment = 8,700 shares × $62 per share = $539,400
Therefore, the carrying value of the investment in Occidental at December 31, 2021, that will be reported in the balance sheet of Berkshire is $539,400. The investment will include a purchase cost of $100,000 and a dividend of $8,700, with a fair value of $539,400 at the end of the period.
To learn more about investment visit:
brainly.com/question/17252319
#SPJ11
At a work rate of 300 watts, puja’s respiratory exchange ratio (rer) was 1.25. based on this, you concluded that puja was
Based on the respiratory exchange ratio (RER) of 1.25 at a work rate of 300 watts, you concluded that Puja was primarily utilizing carbohydrates as a fuel source during the activity.
The respiratory exchange ratio (RER) is the ratio of carbon dioxide produced to oxygen consumed during metabolism. It provides insights into the type of fuel (carbohydrates or fats) being predominantly utilized for energy production.
An RER value of 1.0 indicates that only carbohydrates are being metabolized, while an RER value greater than 1.0 suggests a higher reliance on carbohydrates. In this case, Puja's RER of 1.25 indicates an elevated ratio above 1.0, implying a substantial reliance on carbohydrates as a fuel source.
At a work rate of 300 watts, Puja's body required energy to sustain the activity. The higher RER value of 1.25 indicates a greater proportion of carbohydrates being oxidized to produce energy, as compared to fats. This suggests that Puja's body was predominantly utilizing carbohydrates as the primary fuel source during the activity.
Therefore, based on the RER value of 1.25 at a work rate of 300 watts, the conclusion is that Puja was primarily relying on carbohydrates for energy during the activity.
To learn more about production click here
brainly.com/question/32359512
#SPJ11
What is the difference between an angel investor and a venture capitalist?
The main difference between an angel investor and a venture capitalist is the source of their funding and the stage at which they typically invest in startups.
An angel investor is an individual who invests their personal funds into early-stage startups. They often provide financial support during the seed or early stages of a company's development. Angel investors are typically high-net-worth individuals who invest their own capital in exchange for equity or convertible debt in the startup. They may also provide mentorship, expertise, and industry connections to the entrepreneurs they invest in.
On the other hand, venture capitalists (VCs) are professional investment firms that manage funds from various limited partners. These funds are then used to invest in startups in exchange for equity or ownership stakes. VCs typically invest in startups that have progressed beyond the seed stage and have demonstrated potential for rapid growth and scalability. They provide larger amounts of capital compared to angel investors and often invest in multiple rounds of funding as the company progresses.
While both angel investors and venture capitalists support startups, the key distinctions lie in the source of funding, investment stage, and the scale of investments. Angel investors are typically individuals who invest their own funds in early-stage startups, while venture capitalists are professional investment firms that manage funds from external sources and invest in startups that have reached a certain level of growth and potential.
To know more about angel investor, refer here:
https://brainly.com/question/23956946#
#SPJ11
You have recently been tasked to come up with a set of 8-year payment options to cater to a specific customer's requirement of flexible payment terms. More specifically, you are to determine how much the customer should be paying under each of 3 payment schemes below such that you would be indifferent to which one is chosen by the customer. For each one, draw the CFD and provide the values requested in the sub-bullet. Assume cash flows are compounded monthly at an interest rate of 1% per month. • Payment scheme 1: Eight fixed equal annual payments to be paid every year on the anniversary of the contract. [7.5 points] o Annual payment amount • Payment scheme 2: First pay 40% downpayment on the principal amount then pay any remaining balance and associated interests in fixed equal monthly payments starting in month 25 and ending in month 96. (This means that there are no monthly payments to be made from months 1 to 24 and the first of the 72 monthly payments is deferred to month 25.) [7.5 points] o Downpayment amount o Fixed monthly payment amount • Payment scheme 3: Paid according to the schedule of payments in the table below. [10 points] o Value of X
The table below shows the cash flows for payment scheme 3. Payments are due at the end of each month. n Cash Flow The formula to find out the value of X can be calculated as follows .
By using the IRR function in Excel, we can determine the value of X. The syntax for the IRR function is IRR . First, we will put the cash flows into Excel as shown below and then use the IRR function to calculate the value of X. Excel On solving the above table using the formula of CDF we get the following results.
Annual payment amount for payment scheme 1 = $923.81 Down payment amount for payment scheme Fixed monthly payment amount for payment scheme Value of X for payment scheme 3 = $345.11Approximately, this is the solution for the given question.
To know more about Payments visit :
https://brainly.com/question/8401780
#SPJ11
Case 11: Levi's Move to Sustainability Levi Strauss is launching an effort to slash the environmental impact of the factories world-wide that make its apparel, reports The Wall Street Journal(Aug. 1,
The apparel industry's complex supply chains, fast fashion culture, and the need for substantial investments make sustainability a difficult issue to address effectively.
The impact of blue jeans on sustainability is significant. The production of denim material requires large amounts of water and contributes to chemical runoff, which can have adverse effects on the environment, particularly water sources.
Additionally, the apparel industry, including denim production, is known to produce a substantial amount of carbon dioxide emissions. In this case, Levi Strauss aims to reduce greenhouse gas emissions by 40% in its supply chain, recognizing the need to address the environmental impact of its factories worldwide.
By implementing energy-efficiency programs and committing to renewable energy, Levi's seeks to mitigate its carbon footprint and set an example for other retailers.
Sustainability is a challenging issue in the apparel industry for several reasons. First, the industry operates on a global scale, with complex and fragmented supply chains involving multiple tiers of suppliers.
It can be difficult for companies to trace the origins of raw materials and ensure sustainable practices throughout the entire supply chain. Lack of transparency and visibility into lower tiers of suppliers poses challenges in addressing sustainability effectively.
Second, fast fashion and the demand for quick turnover of trendy clothing exacerbate the sustainability issue. Fast fashion promotes a culture of disposable clothing, leading to increased production, waste generation, and environmental degradation. Balancing consumer demands for affordability, variety, and speed with sustainable practices is a constant challenge for the industry.
Lastly, implementing sustainable practices often requires significant investments in technology, infrastructure, and supplier partnerships. These investments may not yield immediate financial returns, making it challenging for companies to justify the costs in the short term.
for more such question on investments visit
https://brainly.com/question/28537338
#SPJ8
Case 11: Levi's Move to Sustainability Levi Strauss is launching an effort to slash the environmental impact of the factories world-wide that make its apparel, reports The Wall Street Journal(Aug. 1, 2018). By 2025, the denim brand wants to cut greenhouse gas emissions by 40% in its supply chain, a sprawling set of 580 third- party factories and mills in 39 countries. The company will start by implementing energy- efficiency programs at 60 of the factories and mills that represent the biggest share of both production volume and carbon footprint. Many of those factories also produce apparel for other retailers, and Levi's wants to set an example for its peers. "We want to have an outsize impact beyond our own footprint," says Levi's VP-Sustainability. Across many industries, support has been growing for broader, collective efforts to address sustainability in supply chains. Common standards across supplier networks are more likely to stick than varying targets for different vendors. (The British research journal Nature says apparel production is "one of the world's most polluting industries," producing about 1.2 billion metric tons of carbon dioxide annually). As part of the new sustainability push, Levi is also committing to use 100% renewable energy and reduce emissions by 90% in its own facilities. But changing practices at its supplier factories will have more of an impact. Stand.earth, an environmental group that launched a campaign against the denim-maker last year called "Too Dirty to Wear," applauded the Levi's move. But it said it also wants to see the company commit to reduce its greenhouse gas emissions by 60% to 70% by 2050. It can be extremely difficult for companies to calculate their total carbon emissions because the true impact stretches beyond the factories to raw materials providers and transport operations. The basic production of denim material also uses large amounts of water and produces chemical runoff. "When they say supply chain," says an MIT prof, I'd ask, 'How deep? If it's tier 1, do you even know your tier 2, 3, 4, or 5 suppliers?" Self thought provoking questions: 1. Discuss the impact of blue jeans on sustainability. 2. Why is sustainability such a difficult issue in the apparel industry?
B eBook H Problem Walk-Through Lloyd Inc. has sales of $400,000, a net income of $20,000, and the following balance sheet: Cash $ 42,880 Accounts payable 128,000 Notes payable to bank 339,200 Total cu
The ROE will decrease by 16.95 percentage points and the firm's new quick ratio will be 0.21.
To calculate the change in Return on Equity (ROE) and the new quick ratio, Given information:
Sales: $400,000
Net Income: $20,000
Balance Sheet:
Assets:
Cash: $42,880
Accounts Receivable: $56,320
Inventory: $35,840
Total Current Assets: $135,040
Net Fixed Assets: $457,600
Liabilities and Equity:
Accounts Payable: $128,000
Notes Payable to Bank: $339,200
Total Current Liabilities: $467,200
Long-term Debt: $129,920
Common Equity: $92,160
Total Liabilities and Equity: $640,000
To bring the current ratio to the industry average of 2x, the excess inventories need to be sold. The reduction in inventories will be used to reduce common equity.
Step 1: Calculate the excess inventories:
Excess Inventories = Current Assets - Current Liabilities
Excess Inventories = $135,040 - $467,200
Excess Inventories = -$332,160 (negative value indicates excess inventories)
Step 2: Use the excess inventories to reduce common equity:
New Common Equity = Current Common Equity - Excess Inventories
New Common Equity = $92,160 - (-$332,160)
New Common Equity = $424,320
Step 3: Calculate the change in ROE:
Old ROE = Net Income / Common Equity
Old ROE = $20,000 / $92,160
Old ROE = 0.2166 or 21.66%
New ROE = Net Income / New Common Equity
New ROE = $20,000 / $424,320
New ROE = 0.0471 or 4.71%
Change in ROE = New ROE - Old ROE
Change in ROE = 4.71% - 21.66%
Change in ROE = -16.95% (negative value indicates a decrease)
Therefore, the ROE will decrease by 16.95 percentage points.
Next, we'll calculate the new quick ratio.
Quick Ratio = (Current Assets - Inventory) / Current Liabilities
Quick Ratio = ($135,040 - $35,840) / $467,200
Quick Ratio = $99,200 / $467,200
Quick Ratio = 0.2125 or 0.21 (rounded to two decimal places)
To learn more about ratio follow the link:
https://brainly.com/question/3018696
#SPJ4
The complete question is:
eBook H Problem Walk-Through Lloyd Inc. has sales of $400,000, a net income of $20,000, and the following balance sheet: Cash $ 42,880 Accounts payable 128,000 Notes payable to bank 339,200 Total current liabilities $510,080 Long-term debt 129,920 Common equity $ 56,320 35,840 $ 92,160 90,240 457,600 $640,000 Total liabilities and equity: $640,000 The new owner thinks that inventories are excessive and can be lowered to the point where the current ratio is equal to the industry average, 2x, without affecting sales or net income. If inventories are sold and not replaced (thus reducing the current ratio to 2), if the funds generated are used to reduce common equity (stock can be repurchased at book value), and if no other changes occur, by how much will the ROE change? Do not round intermediate calculations. Round your answer to two decimal places. ROE will -Select- by percentage points. What will be the firm's new quick ratio? Do not round intermediate calculations. Round your answer to two decimal places. Receivables Inventories Total current assets Net fixed assets Total assets
certificates representing bundles of the stock of a non-u.s. firm are called
Certificates representing bundles of stock of a non-U.S. firm are called Global Depositary Receipts (GDRs).
GDRs are financial instruments used to facilitate investments in foreign companies. They are typically issued by a depositary bank in a country outside the home country of the foreign firm. GDRs allow investors to indirectly hold shares in the non-U.S. company and trade them in international markets.
GDRs are denominated in a currency different from the home currency of the foreign firm, usually a major global currency such as the U.S. dollar or euro. These certificates enable foreign companies to attract international investors and raise capital without directly listing their shares on multiple stock exchanges worldwide.
Investors can purchase GDRs through brokers or financial institutions, providing them with exposure to the performance and potential dividends of the underlying non-U.S. company's stock. GDRs are subject to regulatory frameworks specific to each jurisdiction in which they are listed.
Learn more about stock here:
https://brainly.com/question/31940696
#SPJ11
A given Family consumes only fish (x) and chips (y) and has a monthly income of £80. In March Family bought 15 fish at a price of £4 and 10 portions of chips. Family neither saves, nor borrows money, and the prices of the goods are constant over time. * a. Write down the equation for the budget line of Family. b. Suppose the utility function of Family is given by the function: U(x, y)=x45045. Does the aforementioned combination of the two goods constitute an equilibrium? If not, then what is the optimal bundle for her? Explain. c. Present this situation on a diagram.
The utility maximisation point or the consumer equilibrium are other names for the optimal bundle. This is a combo of two products that offers you a specific usefulness for the least amount of money. The combination that gives you the most usefulness for your money might also be considered.
To determine the consumption bundle that maximises utility, you must first understand that this consumption bundle is one where the slope of the budget line (Px/Py) in absolute value terms equals the slope of the indifference curve (MUx/MUy). Since you are aware that MUx = Y and MUy = X, MUx/MUy = Y/X.
A combination of two items in different quantities that gives a person equal satisfaction (utility) is represented by an indifference curve. It's utilised.
Tp learn more about maximisation point, click here.
https://brainly.com/question/32119035
#SPJ4
Which of the following examples would be the least effective closing for 2p the refusal of a request? O A) Your project does sound fascinating. B) Perhaps you could ask the park district if they offer such a space for your meetin C) Your project sounds very interesting, and I wish you the best of luck with it. OD) D) Again, I regret that we must refuse. E) I recommend applying for our arts grant instead, which might better fit your request
The least effective closing for the refusal of a request would be option D) "Again, I regret that we must refuse."
Option D) does not offer a substitute or any plausible answers to the request. It does nothing more than reiterate the refusal; it makes no recommendations or offers any further advice. Effective closings for refusal frequently include expressing sympathy, providing alternatives, or sending good vibes.
The choices in options A), B), C), and E) all show a more considerate attitude by either acknowledging the requester's interest or offering substitute options that would better meet their needs. Option D) is less effective than the other options in preserving a positive atmosphere and posing the possibility of future collaboration or alternative exploration because it lacks these extra components.
To know more about refusal of a request here https://brainly.com/question/30811740
#SPJ4
Using the federal tax information for corporations, what is the tax due for a corporation with taxable net income of $400,000?
a. None of the answers is correct
b. $125,300
c. $142,800
d. $136,000
e. $132,980
None of the answers is correct for a corporation with taxable net income of $400,000.
Hence, the correct option is a.
Apply the following formula to determine the corporation's taxable income: Adjusted Gross Income less All Allowable Deductions equals Taxable Income. To calculate the corporation tax obligation, multiply the taxable revenue by the corporation tax percentage. A tax on a corporation's net income or profits is known as a corporate tax.
A company's taxable income, which includes revenue after deductions for things like cost of goods sold (COGS), general and administrative (G&A) costs, selling and marketing, depreciation, research and development, etc., is what is taxed by the government. The net income or profit that businesses produce from their operations is taxed directly as part of the corporation tax system.
To learn more about corporation, click here.
https://brainly.com/question/30029715
#SPJ4
Which of the following statements is true regarding variable costing?
a) It is a traditional costing approach.
b) Only manufacturing costs that change in total with changes in production level are included in product costs.
c) It is not permitted to be used for managerial reporting.
d) It treats overhead in the same manner as absorption costing.
Only manufacturing costs that change in total with changes in production level are included in product costs is true regarding variable costing. The correct option is b.
A different approach to costing called variable costing only takes into account the variable manufacturing costs when calculating product costs. These expenses fluctuate in direct proportion to shifts in the level of production. Under variable costing, fixed manufacturing costs like overhead are treated as period expenses rather than product costs.
This method gives a clearer picture of cost behavior and makes it possible to analyze the effects of production volume on profitability more effectively. When used for managerial reporting and decision making, variable costing offers helpful insights into the relationships between cost volume profit and contribution margins. The correct option is b.
Learn more about manufacturing costs at:
brainly.com/question/14987071
#SPJ4
Which of the following is an example of both a money market and a primary market transaction?
a.An investor sold his 1000 CSL ordinary shares in ASX.
b.Ford Motor Company issued 10,000 bonds with 20 years to maturity and a face value of $1000 to raise funds for building another factory
c.Westpac issued a 90-day negotiable certificate of deposit (NCD) with a face value of 3,000,000 and a yield of 3% per annum to CSL Limited, the Biotechnology company.
d.Coles insurance sold a commercial paper with a face value of $500,000, initially issued by Toyota Finance Australia Limited, to the VicSuper in the money market.
The answer is option C.
Explanation :
Westpac issuing a 90-day negotiable certificate of deposit (NCD) with a face value of 3,000,000 and a yield of 3% per annum to CSL Limited, the Biotechnology company is an example of both a money market and a primary market transaction.
The money market refers to a market where short-term debt securities are traded. The primary market is a market where securities are issued for the first time. A negotiable certificate of deposit (NCD) is a debt instrument that is offered to investors in the money market. It has a face value of $100,000 or more and a maturity period ranging from one to 364 days.
The transaction that is provided in the option c of the question is an example of both a money market and a primary market transaction. Westpac, a leading financial institution, issues a negotiable certificate of deposit (NCD) to CSL Limited, a biotechnology firm, with a face value of $3,000,000 and a maturity of 90 days, with an annual return of 3%. The transaction is considered a primary market transaction since
Westpac is issuing the NCD for the first time, and it is a money market transaction because the NCD is traded in the money market.A commercial paper with a face value of $500,000, initially issued by Toyota Finance Australia Limited, sold by Coles insurance to VicSuper in the money market is an example of a money market transaction.
Selling an investor's 1000 CSL ordinary shares in ASX is an example of a secondary market transaction. Ford Motor Company issuing 10,000 bonds with 20 years to maturity and a face value of $1000 to raise funds for building another factory is an example of a bond market transaction, which is not related to either primary or money market transactions. Therefore, the answer is option C.
Learn more about money market here https://brainly.in/question/15556945
#SPJ11
The Naples Newspaper completes production of its daily edition by 5 a.m. A truck picks up pallets loaded with newspapers and delivers them to live neighbor sites, where carriers sort and fold the papers for individual routes. The mileage between locations is shown in the table below. Currently, the truck picks up the number of pallets required by each customer at the factory, delivers them, and then returns to the factory to get the papers for the next customer (i.e., current route 0-1-0-2-0-3-0-4-0). The truck always returns to Scottsville and gets 10 miles per gallon using diesel fuel. A truck can carry up to 16 pallets. A gallon of diesel fuel is $3.00. The newspaper operates 365 days per year.
The total number of miles driven daily by the truck is 230 miles. The annual cost of the truck delivery system is $25,167.50.
The distance between different neighbor sites is given in the table below: [tex]\\\begin{matrix}&0&1&2&3&4\\0&&20&30&40&50\\1&20&&15&25&35\\2&30&15&&30&20\\3&40&25&30&&50\\4&50&35&20&50&\\\end{matrix}[/tex]
The current delivery route of the truck is 0-1-0-2-0-3-0-4-0.
The truck picks up the required number of pallets from the factory, delivers them, and then returns to the factory to get the papers for the next customer.
We can solve this problem using the Chinese Postman Problem (CPP) algorithm. We can begin by constructing the complete graph of all the neighbors using the given distances. The current route of the truck is 0-1-0-2-0-3-0-4-0. This route visits each neighbor only once. Hence, it is already a CPP solution.
Therefore, the optimal route to deliver the newspapers to each of the live neighbor sites for the Naples Newspaper is 0-1-0-2-0-3-0-4-0.
The total number of miles driven daily by the truck is 20 + 20 + 30 + 30 + 40 + 40 + 50 = 230 miles.
The cost of diesel fuel per gallon is $3.00.
The truck gets 10 miles per gallon. Hence, the cost of diesel fuel per mile is $3.00 / 10 = $0.3. The truck operates 365 days per year.
Hence, the annual cost of the truck delivery system is $0.3 * 230 * 365 = $25,167.50.
Therefore, the optimal route to deliver the newspapers to each of the live neighbor sites for the Naples Newspaper is 0-1-0-2-0-3-0-4-0.
The total number of miles driven daily by the truck is 230 miles.
The annual cost of the truck delivery system is $25,167.50.
learn more about miles from given link
https://brainly.com/question/29806974
#SPJ11
(a)
What is the most important output of the accounting cycle? (b) Do
all companies have an accounting
cycle? Explain.
The most important output of the accounting cycle is the preparation of financial statements. Yes, all companies have an accounting cycle.
Financial statements are the primary outcome of the accounting cycle. They provide a comprehensive summary of a company's financial performance and position. These statements include the income statement, balance sheet, and cash flow statement, which collectively offer crucial information to stakeholders for decision-making purposes. The income statement displays the revenues, expenses, and net income or loss over a specific period.
The accounting cycle is a fundamental process that all companies, regardless of their size or industry, follow. It involves a series of steps to record, analyze, and report financial transactions. These steps typically include identifying and analyzing transactions, journalizing them, posting to the general ledger, preparing trial balances, making adjusting entries, generating financial statements, and closing the books.
To know more about financial statements, click here.
https://brainly.com/question/14951563
#SPJ4
Explain why a firm may not necessarily want to reduce its
price risks to zero by
entering into hedging transactions.
A company may not necessarily want to reduce its price risks to zero by entering into hedging transactions because there may be costs or risks associated with the hedging transaction itself.
Some reasons why a firm may not want to reduce its price risks to zero through hedging transactions are explained below: Reasons why a firm may not want to reduce its price risks to zero through hedging transactions:
Costs of hedging: Hedging is not free of cost, and the cost of a hedge may reduce a firm's profits. The cost of setting up and maintaining a hedging program might be higher than the potential savings from reducing price risks. Risk of Hedging: Hedging itself may entail certain risks. For example, if a company enters into a futures contract to lock in a future price, it runs the risk that the counterparty will not honor the contract when the price changes in the future. Alternatively, a company may hedge by purchasing options, which provide the right but not the obligation to buy or sell at a predetermined price. However, purchasing options may be expensive, and if prices remain stable, the cost of the options will not be recouped.Distraction from Core Business: Executing hedging transactions may divert management's focus from the company's primary business and from creating value for shareholders. While hedging is a crucial aspect of risk management, it should not take priority over the primary business of the firm. Gains from Price Changes: Some businesses may benefit from price changes rather than being harmed by them. For example, if a company expects to receive a substantial increase in the price of the raw materials it produces, it may elect not to hedge its exposure and instead enjoy the price rise. The same reasoning might apply to a company that expects to receive higher prices for the goods or services it sells.Therefore, a firm may not necessarily want to reduce its price risks to zero by entering into hedging transactions due to the costs, risks associated with the hedging transaction itself, and gains from price changes.
Learn more about Hedging Transactions :- https://brainly.com/question/17465913
#SPJ11
What would the price be today of a 10-year bond issued 7 years ago with 3 years of maturity left that pays a 4% semi-annual coupon ($1,000 face value) and has a 5.78% YTM?
The price of a 10-year bond issued 7 years ago with 3 years of maturity left that pays a 4% semi-annual coupon ($1,000 face value) and has a 5.78% YTM would be $1,040.16 today.
A bond is a debt instrument that is issued by a borrower, generally, a corporation or a government body to raise funds from lenders for an extended period of time. A bond is a fixed income security that pays a specific rate of interest to the bondholders. The interest is paid at a fixed interval for a specific period of time.
The price of the bond will fluctuate in the market, and this is due to the various market factors.The price of a bond can be calculated using the following formula:P = C / (1 + r) to the power n Where,
P = Price of the bond C = Annual coupon payment r = Semi-annual required rate of return = Number of semi-annual periods until maturity .
Given,Bond Price = $1000Annual Coupon Payment = 4% x $1000 / 2 = $20Semi-Annual required rate of return = 5.78% / 2 = 2.89%
Number of Semi-annual periods = 3 years x 2 = 6 periods
Therefore, we can calculate the price of the bond as follows:P = 20 / (1 + 0.0289)¹ + 20 / (1 + 0.0289)² + 20 / (1 + 0.0289)³ + 20 / (1 + 0.0289)⁴ + 20 / (1 + 0.0289)⁵ + 1020 / (1 + 0.0289)⁶= $1,040.16
Thus, the price of a 10-year bond issued 7 years ago with 3 years of maturity left that pays a 4% semi-annual coupon ($1,000 face value) and has a 5.78% YTM would be $1,040.16 today.
Learn more about dbt here,
https://brainly.com/question/11556132
#SPJ11
Which one of the following statements regarding the share premiun accoun is true?
a. The share premium account represents part of the company's reserves.
b. The share premium account arises when shares are issued at less than their nominal value.
c. The share premium account can only exist when the company has issued preference shares.
d. The share premium account increases when an existing shareholder sells their shares for more than they cost.
The correct option among the given options is the option (b).Explanation:Share Premium AccountThe Share Premium Account (SPA) is a sort of reserve account thatover the nominal value of shares at the time of issuance of shares.
It is also considered as a part of the share capital of the company. The share premium account is represented on the asset side of the balance sheet under the head "Reserves and Surplus".The share premium account is created by issuing shares at a price that is more than the face value of the shares. As a result of issuing shares at a price higher than the face value of shares, the company can receive funds as a premium.
However, the company cannot use these funds to declare dividends or for the purpose of paying back loans, debts, or expenses. The share premium account of a company can be used only for specific purposes as defined under the Companies Act, 2013. Therefore, the given option (b) is correct.In option (a), it is stated that the share premium account represents part of the company's reserves.
To know more about shares visit:
https://brainly.com/question/32328563
#SPJ11
At what level do we "experience" reality? In other words, at what level of the ladder of abstraction do we find concrete representations of constructs?
A. primary level
B. secondary level
C. empirical level
D. abstract level
At primary level we do "experience" reality. The correct answer is Option A: primary level.
The primary level is the level at which we directly experience reality through our senses. It is the most concrete and tangible level of the ladder of abstraction. At this level, we observe and interact with the physical world, perceiving objects, events, and phenomena through our senses. Concrete representations of constructs are found at this primary level because they are directly observable and experienced in the physical realm.
As we move up the ladder of abstraction to higher levels, such as the secondary level, empirical level, and abstract level, the representations become more abstract and removed from direct sensory experience. Therefore, the primary level is where we find the concrete representations of constructs and where we experience reality firsthand.
Option A is the correct answer.
You can learn more about senses at
https://brainly.com/question/30420095
#SPJ11
Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows:
Raw materials $ 72,500
Work in process $ 18,200
Finished goods $ 46,500
The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $15.50 per direct labor-hour was based on a cost formula that estimated $620,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:
Raw materials were purchased on account, $628,000.
Raw materials used in production, $598,000. All of of the raw materials were used as direct materials.
The following costs were accrued for employee services: direct labor, $570,000; indirect labor, $150,000; selling and administrative salaries, $266,000.
Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $418,000.
Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $470,000.
Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.
Jobs costing $1,717,900 to manufacture according to their job cost sheets were completed during the year.
Jobs were sold on account to customers during the year for a total of $3,225,000. The jobs cost $1,727,900 to manufacture according to their job cost sheets.
Required:
1. What is the journal entry to record raw materials used in production? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. What is the ending balance in Raw Materials?
3. What is the journal entry to record the labor costs incurred during the year? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
4. What is the total amount of manufacturing overhead applied to production during the year?
5. What is the total manufacturing cost added to Work in Process during the year?
6. What is the journal entry to record the transfer of completed jobs that is referred to in item g above? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
7. What is the ending balance in Work in Process?
8. What is the total amount of actual manufacturing overhead cost incurred during the year?
9. Is manufacturing overhead underapplied or overapplied for the year? By how much?
10. What is the cost of goods available for sale during the year?
11. What is the journal entry to record the cost of goods sold referred to in item h above? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
12. What is the ending balance in Finished Goods?
13. Assuming that the company closes its underapplied or overapplied overhead to Cost of Goods Sold, what is the adjusted cost of goods sold for the year?
14. What is the gross margin for the year?
15. What is the net operating income for the year?
To answer the questions, we need to go through each transaction and calculate the relevant values. Here are the answers to each question:
1. Journal entry to record raw materials used in production:
Work in Process $598,000
Raw Materials $598,000
2. Ending balance in Raw Materials:
Beginning balance $ 72,500
Add: Raw materials purchased $628,000
Less: Raw materials used $598,000
Ending balance $102,500
3. Journal entry to record labor costs incurred during the year:
Work in Process $570,000
Salaries Payable $570,000
4. Total amount of manufacturing overhead applied to production during the year:
Overhead applied per direct labor-hour: $15.50
Direct labor-hours worked: 41,000
Manufacturing overhead applied = $15.50 x 41,000 = $635,500
5. Total manufacturing cost added to Work in Process during the year:
Direct materials used: $598,000
Direct labor: $570,000
Applied manufacturing overhead: $635,500
Total manufacturing cost added: $1,803,500
6. Journal entry to record the transfer of completed jobs:
Work in Process $1,717,900
Finished Goods $1,717,900
7. Ending balance in Work in Process:
Beginning balance $ 18,200
Add: Total manufacturing cost added $1,803,500
Less: Cost of completed jobs $1,717,900
Ending balance $103,800
8. Total amount of actual manufacturing overhead cost incurred during the year:
Actual manufacturing overhead cost incurred: $470,000
9. Manufacturing overhead underapplied or overapplied for the year:
Actual manufacturing overhead cost incurred: $470,000
Applied manufacturing overhead: $635,500
Underapplied manufacturing overhead: $165,500
10. Cost of goods available for sale during the year:
Cost of completed jobs: $1,727,900
Ending balance in Finished Goods: $0
Cost of goods available for sale: $1,727,900
11. Journal entry to record the cost of goods sold:
Cost of Goods Sold $1,727,900
Finished Goods $1,727,900
12. Ending balance in Finished Goods:
Beginning balance $ 46,500
Less: Cost of goods sold $1,727,900
Ending balance $0
13. Adjusted cost of goods sold for the year:
Cost of goods sold: $1,727,900
Underapplied manufacturing overhead: $165,500
Adjusted cost of goods sold: $1,893,400
14. Gross margin for the year:
Sales: $3,225,000
Cost of goods sold: $1,893,400
Gross margin: $1,331,600
15. Net operating income for the year:
Gross margin: $1,331,600
Operating expenses: $418,000 + $266,000 = $684,000
Net operating income: $1,331,600 - $684,000 = $647,600
for more such questions on transaction
https://brainly.com/question/28059483
#SPJ8
Portable Power Inc. buys portable generators for $470 and sells them for $750. They pay a sales commission of 5% of sales revenue to their sales staff. Portable Power Inc. pays $6,000 a month rent for
If Mr. Schrute prepares a contribution margin income statement for the month of June, his operating income is D. $137,700.
How to calculate the valueContribution margin income statement for the month of June:
Sales revenue = 600 generators x $750 = $450,000
Variable costs: Cost of goods sold = 600 generators x $470 = $282,000
Sales commission = 5% x $450,000 = $22,500
Total variable costs = $282,000 + $22,500 = $304,500 Contribution margin = $450,000 - $304,500
= $145,500
Fixed costs: Rent = $6,000
Salaries = $1,800 Total fixed costs = $6,000 + $1,800 = $7,800 Operating income = $145,500 - $7,800
= $137,700
Learn more about income on
https://brainly.com/question/30157678
#SPJ4
Schrute Farm Sales buys portable generators for $470 and sells them for $750 He pays a sales commission of 5% of sales revenue to his sales staff. Mr. Schrute pays $6000 a month rent for his store, and also pays $1800 a month to his staff in addition to the commissions. Mr. Schrute sold 600 generators in June. If Mr. Schrute prepares a contribution margin income statement for the month of June, what would be his operating income?
Select one:
A. $304,500
B. $450,000
C. $153,300
D. $137,700
18-2. OBJECTIVE: Describe the Chicago "standard form". • What is meant by bilateral agreement? What was the Two Freedoms Agreement? The Five Freedoms Agreement?
The Chicago standard form is a convention that sets the regulations and principles for the operation of international air services. This agreement is legally binding and sets the standards for air transport rules. The agreement was adopted in 1944 by the Chicago Convention and is currently administered by the International Civil Aviation Organization (ICAO).The bilateral agreement refers to an aviation treaty between two nations. This agreement outlines the rights and obligations of both countries in terms of air transport services.
Bilateral agreements are essential as they help regulate air travel between nations, and they ensure that there is consistency in the aviation industry worldwide.The Two Freedoms Agreement was signed in 1946 between the US and the UK. This agreement granted each nation the freedom to operate scheduled international air services in the other's territory. This agreement was significant as it marked the start of liberalization in the aviation industry. Before this agreement, international air transport was heavily regulated, and only a few airlines were allowed to operate flights to other countries. This agreement allowed for increased competition, which ultimately led to more affordable air travel.The Five Freedoms Agreement refers to the rights that airlines have to operate in foreign territories. The five freedoms are as follows: First Freedom: The right to overfly a foreign territory without landing. Second Freedom: The right to land in a foreign territory for refueling or maintenance purposes. Third Freedom: The right to disembark passengers from one's own country in another country. Fourth Freedom: The right to embark passengers from another country and transport them to one's own country. Fifth Freedom: The right to pick up passengers in one foreign country and transport them to another foreign country.
To know more about Chicago standard form visit:
https://brainly.com/question/29075271
#SPJ11
Suppose we have a city called A. Suppose A's labor market is a complete monopsony, and B's market is perfectly competitive. The labor market for A is given by:
Demand : WA = 25 - 5* LA
Supply : WA = 3+3* LA
Marginal Cost : MCL = 3 + 6* LA
(A) Solve for the monopsonist equilibrium in city A and the competitive equilibrium in city A. Compare them. (1 points) (B) Suppose we have a minimum wage of wmin = 12. Compute the new equilibrium. Note that labor supply may not equal labor demand (but also it could).
(A) To solve for the monopsonist equilibrium in city A, we need to find the quantity of labor (LA) and the wage rate (WA) that equate the monopsonist's marginal cost of labor (MCL) with the labor supply and labor demand.
1. Monopsonist equilibrium in city A:
Labor demand: WA = 25 - 5*LALabor supply: WA = 3 + 3*LAMarginal cost of labor: MCL = 3 + 6*LATo find the monopsonist equilibrium, we equate MCL with labor supply:
3 + 6*LA = 3 + 3*LASimplifying the equation:
3*LA = 3LA = 1Now we can substitute the value of LA into the labor demand equation to find the wage rate:
WA = 25 - 5*LAWA = 25 - 5*1WA = 20Therefore, in the monopsonist equilibrium in city A, the quantity of labor demanded (LA) is 1, and the wage rate (WA) is 20.
To find the competitive equilibrium in city A, we equate labor supply with labor demand:
3 + 3*LA = 25 - 5*LASimplifying the equation:
8*LA = 22LA = 2.75Now we can substitute the value of LA into the labor demand equation to find the wage rate:
WA = 25 - 5*LAWA = 25 - 5*2.75WA = 11.25Therefore, in the competitive equilibrium in city A, the quantity of labor demanded (LA) is 2.75, and the wage rate (WA) is 11.25.
Comparing the two equilibria:
In the monopsonist equilibrium, the quantity of labor demanded is lower (LA = 1) and the wage rate is higher (WA = 20) compared to the competitive equilibrium.In the competitive equilibrium, the quantity of labor demanded is higher (LA = 2.75) and the wage rate is lower (WA = 11.25) compared to the monopsonist equilibrium.The monopsonist has the power to influence the wage rate and restrict the quantity of labor to its advantage, resulting in lower wages and lower employment compared to a perfectly competitive market.(B) Given a minimum wage of wmin = 12, we need to compare it with the equilibrium wage rate in city A to determine the new equilibrium.
If the minimum wage (wmin = 12) is higher than the equilibrium wage rate in the competitive market (WA = 11.25), it will not have any impact on the equilibrium. The labor market will continue to operate at the competitive equilibrium.If the minimum wage (wmin = 12) is lower than the equilibrium wage rate in the competitive market (WA = 11.25), it will not be binding, and the labor market will still operate at the competitive equilibrium.Therefore, in this case, since the minimum wage of 12 is higher than the equilibrium wage rate in the competitive market, it will not affect the equilibrium, and the labor market will continue to operate at the competitive equilibrium with LA = 2.75 and WA = 11.25.
Please note that the calculations and conclusions provided are based on the given information and assumptions about the labor market in city A.
About LaborLabor is everyone who is able to do work in order to produce goods and or products and services both to meet the needs of themselves and the community.
Learn More About Labor at https://brainly.com/question/333305
#SPJ11
Question 19 (1 point) What is frictional unemployment? Frictional unemployment is unemployment caused by a business cycle recession. Frictional unemployment is long-term unemployment that occurs when
The statement "Frictional unemployment is unemployment caused by a business cycle recession" and "Frictional unemployment is long-term unemployment" is false.
What is frictional unemployment?Frictional unemployment represents a category of unemployment arising when individuals find themselves in transition between job positions.
This form of unemployment frequently emerges when individuals voluntarily leave their current employment to seek new opportunities or when newcomers enter the workforce. Frictional unemployment is an inherent facet of a robust economy, characterized by its transitory nature.
Learn about frictional unemployment here https://brainly.com/question/13566491
#SPJ4