Which of the following does not influence the inner workings of a free market?

Quartz Corporation is a relatively new firm. Quartz has experienced enough losses during its early years to provide it with at l

8_murik_8 [283]

Answer:

a. Quartz’s reservation price = $306,006.68

b. New Leasing Company’s reservation price = $234,034.25

Explanation:

Given:

Cost = Cost of the equipment = $970,000

n = number of years of lease term = 4

r = cost of borrowing rate = 10%, or 0.10

t = tax rate = 30%, or 0.30

DF = Discounting factor or PV of $1 = ((1-(1/(1 + r))^n)/r) = ((1-(1/(1 + 0.10))^5)/0.10) = 3.16986544634929

a. What is Quartz’s reservation price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

The implication of the zero effective tax rate is that depreciation tax shield foregone does not exist. In addition, there is no difference between the after-tax lease payment and the pre-tax payment, and there is also no difference between the pre-tax cost of debt and the after-tax cost.

Quartz’s reservation price can therefore be calculated by setting net advantage to leasing (NAL) equal to zero and solve as follows:

NAL = 0 = Cost – (PMT * DF) ………… (1)

Substituting the relevant values into equation (1), we have:

0 = $970,000 – (PMT * 3.16986544634929)

$970,000 = PMT * 3.16986544634929

PMT = $970,000 / 3.16986544634929

PMT = $306,006.68

Quartz’s reservation price = PMT = $306,006.68

b. What is New Leasing Company’s reservation price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Depreciation tax shield = (Cost / n) * t = ($970,000 / 4) * 30% = $72,750

New r = After-tax debt cost = r * (1 - t) = 0.10 * (1 - 0.30) = 0.07

New DF = ((1-(1/(1 + New r))^n)/New r) = ((1-(1/(1 + 0.07))^5)/0.07) = 4.10019743594759

The New Leasing Company’s reservation price can therefore be calculated by setting NPV to zero as follows:

NPV = 0 = -Cost + (PMT * (1 – t) * New DF) + (Depreciation tax shield * New DF)

0 = -$970,000 + (PMT * (1-0.30) * 04.10019743594759) + ($72,750 * 4.10019743594759)

$970,000 - ($72,750 * 4.10019743594759) = PMT * (1-0.30) * 04.10019743594759

$671,710.636534813 = PMT * 2.87013820516331

PMT = $671,710.636534813 / 2.87013820516331

PMT = $234,034.25

New Leasing Company’s reservation price = PMT = $234,034.25

8 0

3 years ago

When the price of hot dogs is $1.50 each, 500 hot dogs are sold every day. After lowering the price to $1.35 each, 510 hot dogs

AURORKA [14]

Answer: The price elasticity of demand for hot dog is -0.2

Explanation: Price elasticity of demand is the percentage change in quantity of a goods divided by the percentage change in the price of the goods

PED = %∆Q ÷ %∆P

STEP1: CALCULATE THE PERCENTAGE CHANGE IN QUANTITY

[(510 - 500) ÷ 500 ] × 100 = 2%

STEP2: CALCULATE THE PERCENTAGE CHANGE IN PRICE

[($1.35 - $1.50) ÷ $1.50] ×100 = -10%

STEP3: CALCULATE THE PRICE ELASTICITY OF DEMAND

2% ÷ (-10%) = -0.2

The price elasticity is -0.2 which means that the demand is inelastic. Demand is elastic when percentage change in quantity is greater than percentage change in price.

4 0

3 years ago

The _____is a personality assessment model that taps basic dimensions encompassing most of the significant variation in human pe

Vitek1552 [10]

Answer:

Big Five model

Explanation:

The Big Five model also known as the Five Factor Model (FFM) or Ocean or Canoe model is a way of grouping human behavior/traits. This behavior or traits are subject to relationship between words.

The Ocean or Canoe (OCEAN/CANOE) abbreviation is a combination of the first letters of the words of the the five(big five) traits.

Openness to experience, Conscientiousness, Extroversion, Agreeableness, emotional stability(Neuroticism). It can also be rearranged to form CANOE as well.

This five traits are also affected by the upbringing or family cultures as well. Anyone described with any of the above word is most likely to have attributes that exemplify the meaning of the words.

I hope this helps.

4 0

4 years ago

What key role does compliance play for any industry? Why do you believe is important?

kkurt [141]

Answer:

Hi

The logistics system of any company usually has the options of an external offer framework, specifying the use of the service of specification of agents of the environment through alliances and subcontracting, always looking for better levels of specialization that return in the achievement of the cables. In this sense, the logistics system tries to balance a permanent coordination scheme with all operating elements.

For the strategy and operation of logistics, it is necessary to build a strategic plan aligned with the strategic business plan, where it is necessary to detail the mission, vision, strategic objectives and program of actions to guide logistics management at all levels, planning inventories, supply, product receipts, mobility, third-party services, distribution and customer service. Given this, the bias associated with the traditional management of incidents or claims to be part of a proactive approach that plays a key role in improving the competitiveness of the company is avoided.

Explanation:

8 0

4 years ago

A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $240,000. The nu

matrenka [14]

Answer:

a. 120,000 units

Explanation:

The formula to compute the break even point is shown below:

= (Total fixed cost) ÷ (Contribution margin per unit)

where,

Contribution margin per unit = Selling price per unit - Variable expense per unit

= $5 - $3

= $2 per unit

And, the total fixed cost is $240,000

So, the break even point in units is

= $240,000 ÷ $2 per unit

= 120,000 units

3 0

3 years ago