In the demand-withdraw interaction pattern, the person who asks for the change is the

The real risk-free rate is 2.05%. Inflation is expected to be 3.05% this year, 4.75% next year, and 2.3% thereafter. The maturit

tester [92]

Answer:

The yield on a 7-year Treasury note is 5.11%.

Explanation:

Given

Real risk-free rate = r* = 2.05%. Inflation Rate = 3.05% this year, 4.75% next year, and 2.3% thereafter.

Time = 7 years

Maturity risk premium, MRP = 0.05(t- 1)%

First, we'll calculate the average inflation rate for the next 7 years.

This is given by:

((3.05% * 1) + (4.75% * 1) + (2.3% * (7-2)))/7

This is so, because the Inflation Rate is 3.05% this year (1 year), 4.75% next year (1 year), and 2.3% thereafter (7-2=5 years).

So, we have

(3.05% + 4.75% + 11.5%)/7

= 19.3%/7

= 2.757142857142857%

= 2.76%

So, IP7 = 2.76%

The yield on a 7-year Treasury note is calculated by

r* + IP7 + MRP

Yield = 2.05% + 2.76% + 0.05(t- 1)% where t = 7

Yield = 4.81% + 0.05(7-1)%

Yield = 4.81% + 0.05*6%

Yield = 4.81% + 0.3%

Yield = 5.11%

5 0

4 years ago

TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry. One of th

Rama09 [41]

The selling price of one unit of products less the variable manufacturing expenses is the contribution margin per unit. The amount that each sale contributes to covering fixed costs is known as the contribution margin per unit. It will show the profit per unit sold once the fixed costs have been paid.

<h3>How to find the Contribution margin per unit and Contribution margin per welding hour?</h3>

Computation of Contribution margin per unit (Assuming Direct Labor exists Fixed cost)

Manufactured

Purchased WVD drums WVD drums Bike frames

Selling price $233.00 $233.00 $344.00

Variable costs:

Direct materials $201.00 $52.10 $112.00

Variable manufacturing overhead $0.00 $1.35 $1.90

Variable selling and administrative $0.75 $0.75 $3.40

Total variable cost 201.75 54.2 $117.30

Contribution margin per unit $31.25 $178.80 $226.70

Computation of Contribution margin per welding hour

Manufactured

WVD drums Bike frames

Contribution margin per unit $178.80 $226.70

Welding hours per unit 0.4 0.5

Contribution margin per welding hour $447.00 $453.40

Ranking 2 1

To learn more about contribution margin per unit refer to:

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4 0

2 years ago

A distributor of large appliances needs to determine the order quantities and reorder points for the various products it carries

Mkey [24]

Answer:

a. 32 refrigerators

b. 29 refrigerators

Explanation:

a. The computation of the economic order quantity is shown below:

$= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}$

$= \sqrt{\frac{2\times \text{500}\times \text{\$100}}{{\$500 \times 20\%}}}$

= 32 refrigerators

b. Now the reorder point is

= Annual demand ÷ total number of days in a year × lead time + (service level × standard deviation for the lead time)

= 500 units ÷ 365 days × 7 days + (1.90 × 10 units)

= 9.59 + 19

= 29 refrigerators

4 0

4 years ago

Carrabelle Company has provided the following information: Sales price per unit $56 Variable cost per unit 12 Fixed costs per mo

lutik1710 [3]

Answer:

The Contribution margin ratio (CRM) is 78.57%

Explanation:

CRM (Contribution margin ratio), it indicates the percentage (%) of each sales dollar available to cover the fixed assets as well as profits of the company.

The formula to compute the contribution margin ratio (CMR) is as:

CMR (contribution margin ratio) = (Sales - Variable expense) / Sales

where

Sales amounts to $56

Variable cost or expense amounts to $12

Putting the values above:

CRM (contribution margin ratio) =($56- $12) / $56

= $44 / $56

= 78.57%

5 0

3 years ago

Oberon, Inc., has a $15 million (face value) 10-year bond issue selling for 99 percent of par that pays an annual coupon of 8.35

Grace [21]

Answer:

The before-tax component cost of debt is 8.489%.

Explanation:

We apply the formula for yield to maturity (YTM) to solve this problem.

YTM = [C + (F-P)/n] / [(F+P)/2] where

C = Coupon payment

F = Face value of bond

P = Present value of bond (or current selling price)

n = Years to maturity

The given values are:

F = $15,000,000

P = 0.99 x $15,000,000 = $14,850,000

C = 0.0835 x $15,000,000 = $1,252,000

n = 10

Applying these values in the above formula,

YTM = [1,252,000 + (15,000,000 - 14,850,000)/10]

/ [(15,000,000 + 14,850,000)/2]

YTM = 1,267,000 / 14,925,000

YTM = 0.08489

YTM = 8.489%

7 0

3 years ago

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