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3 years ago

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In 1999, a judge declared that Microsoft was a monopolist. Assuming that Microsoft has a linear demand curve and that it is maxi

mizing its profits at its current level of output, we may conclude that if Microsoft were to increase its price, its total revenue would:
A) rise.
B) fall.
C) remain unchanged.
D) there is insufficient information to make a determination.

1 answer:

shtirl [24]3 years ago

8 0

Answer:

B) fall

Explanation:

if Microsoft were to increase its price, its total revenue would fall

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During December, Rainey Equipment made a $658,000 credit sale. The state sales tax rate is 6% and the local sales tax rate is 1.

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Answer:

Debit: Accounts Receivable 707,350

Credit: Sales Revenue 658,000

Credit: Sales taxes payable ([6% + 1.5%] × $658,000) = $49,350

Explanation:

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3 years ago

Instructions: Please make sure that you show all your work when solving the problems. Feel free to make any assumptions whenever

My name is Ann [436]

Answer:

Explanation:

From the given information:

The current price = $\dfrac{Dividend(D_o) \times (1+ Growth \ rate) }{\text{Cost of capital -Growth rate}}$

$15 = \dfrac{0.50 \times (1+ Growth rate)}{8\%-Growth rate}$

$15 \times (8 -Growth \ rate) = 0.50 +(0.50 \times growth \ rate)$

$1.20 - (15 \times Growth \ rate) = 0.50 + (0.50 \times growth \ rate)$

$0.70 = (15 \times growth \ rate) \\ \\ Growth \ rate = \dfrac{0.70}{15.50} \\ \\ Growth \ rate = 0.04516 \\ \\ Growth \ rate \simeq 4.52\% \\ \\$

2. The value of the stock

Calculate the earnings at the end of 5 years:

$Earnings (E_o) \times Dividend \ payout \ ratio = Dividend (D_o) \\ \\ Earnings (E_o) \times 35\% = \$0.50 \\ \\ Earnings (E_o) =\dfrac{\$0.50}{35\%} \\ \\ = \$1.42857$

$Earnings (E_5) year \ 5 = Earnings (E_o) \times (1 + Growth \ rate)^{no \ of \ years} \\ \\ Earnings (E_5) year \ 5 = \$1.42857 \times (1 + 12\%)^5 \\ \\ Earnings (E_5) year \ 5 = \$2.51763$

Terminal value year 5 = $\dfrac{Earnings (E_5) \times (1+ Growth \ rate)}{Interest \ rate - Growth \ rate}$

$=\dfrac{\$2.51763\times (1+0.04516)}{8\%-0.04516}$

=$75.526

Discount all potential future cash flows as follows to determine the stock's value:

$\text{Value of stock today} =\bigg( \sum \limits ^{\text{no of years}}_{year =1} \dfrac{Dividend (D_o) \times 1 +Growth rate ) ^{\text{no of years}}}{(1+ interest rate )^{no\ of\ years} }$

$+ \dfrac{Terminal\ Value }{(1+interest \ rate )^{no \ of \ years}} \Bigg)$

$\implies \bigg(\dfrac{\$0.50\times (1 + 12\%)^1) }{(1+ 8\%)^{1} }+ \dfrac{\$0.50\times (1+12\%)^2 }{(1+8\% )^{2}}+ \dfrac{\$0.50\times (1+12\%)^3 }{(1+8\% )^{3}} + \dfrac{\$0.50\times (1+12\%)^4 }{(1+8\% )^{4}} + \dfrac{\$0.50\times (1+12\%)^5 }{(1+8\% )^{5}} + \dfrac{\$75.526}{(1+8\% )^{5}} \bigg )$

$\implies \bigg(\dfrac{\$0.5600}{1.0800}+\dfrac{\$0.62720}{1.16640}+\dfrac{\$0.70246}{1.2597}+\dfrac{\$0.78676}{1.3605}+\dfrac{\$0.88117}{1.4693}+ \dfrac{\$75.526}{1.4693} \bigg)$

=$ 54.1945

As a result, the analysts value the stock at $54.20, which is below their own estimates.

3. The value of the stock

Calculate the earnings at the end of 5 years:

$Earnings (E_o) \times Dividend payout ratio = Dividend (D_o) \\ \\ Earnings (E_o) \times 35\% = \$0.50 \\ \\ Earnings (E_o) =\dfrac{\$0.50}{35\%}\\ \\ = \$1.42857$

$Earnings (E_5) year \ 5 = Earnings (E_o) \times (1 + Growth \ rate)^{no \ of \ years} \\ \\ Earnings (E_5) year \ 5 = \$1.42857 \times (1 + 12\%)^5 \\ \\ Earnings (E_5) year \ 5 = \$2.51763 \\ \\$

Terminal value year 5 = $\dfrac{Earnings (E_5) \times (1+ Growth \ rate)\times dividend \ payout \ ratio}{Interest \ rate - Growth \ rate}$

$=\dfrac{\$2.51763\times (1+ 7 \%) \times 20\%}{8\%-7\%}$

=$53.8773

Discount all potential cash flows as follows to determine the stock's value:

$\text{Value of stock today} =\bigg( \sum \limits ^{\text{no of years}}_{year =1} \dfrac{Dividend (D_o) \times 1 + Growth rate ) ^{\text{no of years}}}{(1+ interest rate )^{no \ of\ years} }+ \dfrac{Terminal \ Value }{(1+interest \ rate )^{no \ of \ years }} \bigg)$

$\implies \bigg( \dfrac{\$0.50\times (1 + 12\%)^1) }{(1+ 8\%)^{1} }+ \dfrac{\$0.50\times (1+12\%)^2 }{(1+8\% )^{2}}+ \dfrac{\$0.50\times (1+12\%)^3 }{(1+8\% )^{3}} + \dfrac{\$0.50\times (1+12\%)^4 }{(1+8\% )^{4}} + \dfrac{\$0.50\times (1+12\%)^5 }{(1+8\% )^{5}} + \dfrac{\$53.8773}{(1+8\% )^{5}} \bigg)$

$\implies \bigg (\dfrac{\$0.5600}{1.0800}+\dfrac{\$0.62720}{1.16640}+\dfrac{\$0.70246}{1.2597}+\dfrac{\$0.78676}{1.3605}+\dfrac{\$0.88117}{1.4693}+ \dfrac{\$53.8773}{1.4693} \bigg)$

=$39.460

As a result, the price is $39.460, and the other strategy would raise the value of the shareholders. Not this one, since paying a 100% dividend would result in a price of $54.20, which is higher than the current price.

Notice that the third question depicts the situation after 5 years, but the final decision will be the same since we are discounting in current terms. If compounding is used, the future value over 5 years is just the same as the first choice, which is the better option.

The presumption in the second portion is that after 5 years, the steady growth rate would be the same as measured in the first part (1).

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3 years ago

Organizational culture refers to: a. how a firm acquires, uses, and develops its various resources and capabilities. b. a set of

Amanda [17]

Answer:

d. the complex set of ideologies, symbols, and core values that are shared throughout the firm.

Explanation:

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3 years ago

After writing off a $300 account balance for Ballman Company using the allowance method, Ballman Company sends in the payment. T

makvit [3.9K]

Answer:

The journal entry is shown below:

Explanation:

The journal entry for writing off the amount through using the Allowance Method is as:

Allowance for Bad debts A/c.............................Dr $300

Accounts Receivable A/c...........................Cr $300

While writing off the amount of bad debt, the allowance for bad debts account is debited against the accounts receivable account.

The journal entry which is to be recorded for reversing the write off through using the Allowance Method:

Accounts Receivable A/c...........................Dr $300

Allowance for Bad debts A/c......................Cr $300

So, for reversing the original entry would be reversed, which means the accounts receivable account is debited as the payment is received and the bad debts got decrease, which means the allowance for Bad debts is credited.

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All of the following are necessary to calculate the total purchase price for a municipal bond traded on a yield basis in the sec

ahrayia [7]

Answer: The response options are wrong, those that correspond according to what I found on the internet are:

All of the following are necessary to calculate the total purchase price for a Municipal bond traded on a yield basis in the secondary market EXCEPT:

A. Coupon rate

B. Yield to Maturity

C. Dated date

D. Trade date

<u>The correct answer is "C. Dated date".</u>

<u>Option "C" is correct because to calculate the price of a bond it is not necessary the day of issuance of the bond, is enough with its YIELD TO MATURITY, RATE CUPON AND YEARS TO MATURITY.</u>

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3 years ago