If a shoe firm sells its shoes at a price lower than the opportunity cost of the inputs used in production process, the shoe firm might not gain its income from that business. In order to make the business run, each item's price must be added with a mark up to continue the business.
Answer:
After 18.44 year loan will be paid
Explanation:
We have given an entrepreneur borrows $500,000 today.
So total amount is $500000
Annual payment is of $70000
Rate of interest r = 11.5 %
We have to find the time period
We know that total amount is given by
, here A is total amount , P is yearly paid amount, r is rate of interest and n is time period
So
Taking log both side
n = 18.44 year
So after 18.44 year loan will be paid
Answer:
a. Break-even point in sales units = 350,000 units
b. Break- even point in sales units to achieve a target profit of $400,000 = 430,000 units
Explanation:
a. Break-even point in sales units = Fixed cost ÷ Contribution margin per unit
= $1,750,000 ÷ $5
= 350,000 units
Working note:- Contribution margin = $15 - $10 = $5
b. Break- even point in sales units to achieve a target profit of $400,000 = fixed cost + Targeted profit ÷ Contribution margin per unit
= $1,750,000 + $400,000 ÷ $5
= $2,150,000 ÷ $5
= 430,000 units
False.
Social media has become an important tool for a company to communicate with its target audience. In the case of REI Co-op, the use of social media with happy campers exists to affirm the value of the brand, since advertising is consistent with the company's activities. This is a way of communicating brand value in the hope of attracting and retaining customers.
Answer:
<em>The replicating portfolio today for a 6-month European put option with a strike price of $42 is 0.2044
</em>
Explanation:
<em>Since the strike price and maturity of the options and is was not explained, I am taking these equal to that mentioned in part (a)</em>
<em>Kindly find an attached image showing he two step binomial tree for valuing a 1 year European put with strike, K = $42</em>
<em>The first step to take is to find the replicating portfolio.</em>
<em>Part (a): Replicating portfolio
</em>
<em>
Thus,</em>
<em>we calculate the delta of the put option.
</em>
<em>
We see that as the stock price changes from $40 to $44.2068, the option price changes from $0.86 to $0.00
</em>
<em>
Thus, the delta of the put option is (0-0.86)/(44.2068-40) = - 0.2044
</em>
<em>
Therefore, replicating portfolio for the 6 month European put option with K=$42 is selling short 0.2044 shares for each contract and lending cash for 6 months at the risk free rate.</em>