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pishuonlain [190]
3 years ago
14

Identify how planned investment will change in each scenario. Airwings, a commercial airline manufacturer, becomes optimistic ab

out economic conditions after seeing reports of strong growth in consumer spending. Due to Airwings, planned investment The Federal Reserve announces an end to accommodative monetary policy, and is now implementing policy tools that will increase the real interest rate. Due to the Fed, planned investment In an effort to reduce constant budget deficits, Congress announces plans to increase the corporate income tax rate. Due to the Congress, planned investment A major recession has reduced consumption spending, which has hurt profit levels for Aston-Benz, a high-end car manufacturer. Due to the recession, planned investment
Business
1 answer:
kari74 [83]3 years ago
7 0

Answer:

See explaination for the details of the answer.

Explanation:

1) Increase

As business is optimistic about its future, such business will start capacity expansion to cater for consumer demand.

2) Decrease

Higher real interest rate simply means borrowing cost is higher for the firms and so that they will reduce the investment in respose to that.

3) Decrease

A lower tax means higher profits and firms can pass these benefits to consumers with lower prices, to employees with higher wages and to the government with tax on profit. However, if the rate of tax itself has been increased then in that case corporates will see higher tax as a dampener in sentiments and they might curtail investment plans.

4) Decrease

A recession means there will be lesser economic activity overall and demand will be lower so as the consumption. In such case, planned investment will be reduced.

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5 0
3 years ago
accountants who work at the corporate headquarters of a large department store chain use state-of-the-art systems to create fina
belka [17]

The major advantage of departmentalizing the accountant is because its ensure maximum efficiency since employees could coordinate work within the department function.

Simply put, the term "Departmentalization" refers the process of grouping activities or function into section under the same department.

For instance, every company have an accounting department. The process of sub-grouping the accounting department into legal compliance or financial control, Reports and financial statements, Budgeting etc is known as departmentalization.

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6 0
2 years ago
1 . Perpetuities Perpetuities are also called annuities with an extended or unlimited life. Based on your understanding of perpe
Dmitrij [34]

Answer:

(A) A perpetuity is a stream of regularly timed, equal cash flows that continues forever

(B) The value of a perpetuity is equal to the sum of the present value of its expected future cash flows

the bank offers 1.6%

in the alternative scenario it offers 1.067%

Explanation:

(A) A perpetuity is a stream of regularly timed, equal cash flows that continues forever

The perpetuity is an annuity in which time tends to infinity, to be qualified as an annuity the cash payment must be regular.

(B) The value of a perpetuity is equal to the sum of the present value of its expected future cash flows

As state above the perpetuinty is an annuity, the annuities return the present value of the expcted future cash flow.

Given the annuity formula

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

if times tends to infinity then the expression:

\lim_{n \to \infty} (1+r)^{-n} = 1

Nexti n the annuity formula we got:

C \times \frac{1-1 }{rate}= PV\\

So we end up with C / rate = PV

which s the perpetuity formula

800/50000 = 0.016       = 1.6%

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7 0
3 years ago
A fast food restaurant chain has identified day commuters as its market segment. If the chain wants to persuade this segment to
salantis [7]

What would be the most likely place for it to advertise is: on buses and with signs on parking lots.

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7 0
2 years ago
Golden Eye Co., a hi-tech satellite company, has asked you to value the company for possible cross-listing in the U.S. The compa
EastWind [94]

Answer:

Explanation:

Let's first determine the free cash flow of the firm

Particulars                            Years

                          1                         2                   3

EBIT                  540                   680                750

<u>Tax at 36%    (0.36*540)       (0.36*680)        (0.36*750)    </u>

Less:               345.6                  435.2            480

Net Capital -

Spending            150                   170                 190

<u>Change in NWC    70                    75                  80      </u>

Less:                    125.6              190.2                210

The terminal value at the end of T =(3  years) is:

= \dfrac{Free \ cash \ flow}{unlevered \ cost - expected \ growth  \ rate}

= \dfrac{250}{0.1643-0.04}

= \dfrac{250}{0.1243}

= 2011.26

Finally, the value of the firm can be computed as follows:

Years                  Free Cash Flow        PVIF           PV

1                          125.6                        0.6589        107.88

2                         190.2                        0.7377         140.31

3                          210                           0.6336       133.06

<u>Terminal Value  2011.26                    0.6336        1294.33     </u>

<u>Value of the firm   ⇒                                               $1655.58</u>

5 0
3 years ago
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