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Lynna [10]
3 years ago
12

Your business partner has proposed you to join him (her) in investing $100000 each in a new enterprise. assume that you have tha

t amount of money available. in case of success your return is $40000 but in case of failure you lose $20000. your analysis shows P40=0.3 of success and P-20=0.7 of failure.
would you invest?what is your investment risk preference and analysis?
Business
1 answer:
hjlf3 years ago
7 0

Answer:

I wouldn't invest.

Risk preference at least 50-50 chance of gain and loose

Explanation:

case of success the return i get is $40000

case of failure i lose $20000.

My analysis shows P40=0.3 of success

And P-20=0.7 of failure.

The probability of a loose is much bigger than the probability of a gain.

So I can't bear the loose of loosing 7 times if about 20000 and gaining 3 times of about 40000 it doesn't balance.

My loose accumulating to 140000

While my gain is 120000.

I can't invest

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A customer has purchased 1,000 shares of ABC stock at $44 per share, paying a commission of $1.00 per share for the transaction.
Sonbull [250]

Answer:

Option D) 1,200 shares held at a cost basis of $37.50 per share

Explanation:

Data provided in the question:

Number of shares of ABC stocks purchased by the customer = 1,000

Price per share of ABC stock = $44

Commission paid = $1.00 per share

Stock dividend declared = 20%

Now,

The Payment of a stock dividend will increase the number of shares held by the investor

also,

each share is theoretically worth less after the stock dividend is paid.

Therefore,

The number of shares customer will have = Shares purchased × (1 + Dividend declared)

= 1000 × ( 1 + 0.20)

= 1200 shares

Also,

Cost basis for the share = Selling price + Commission

= $44 + $1

= $45

Thus,

The adjusted cost basis = $45 ÷ 1.20

= $37.50 per share

Hence,

Option D) 1,200 shares held at a cost basis of $37.50 per share

3 0
3 years ago
A(n) __________ is money set aside by formal action for a specific use.
lora16 [44]
A) appropriation <span>is money set aside by formal action for a specific use. appropriation casework bill constituent</span>
8 0
3 years ago
Caldwell Co. uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $300,000 to $360,000.
VLD [36.1K]

Answer and Explanation:

The preparation of flexible budget is shown below:-

                                                  Budget           Actual      Difference F/U  

                                               $330,000        $330,000  

Variable expenses    

Sales commissions                 $16,500             $17,200      $700          U

                                          ($330,000 × 5%)

Advertising                              $13,200             $12,000      $1200        F

                                          ($330,000 × 4%)

Traveling                                  $23,100             $23,700      $600        U

                                          ($330,000 × 7%)

Delivery                                    $3,300              $2,400        $900         F

                                          ($330,000 × 1%)

Total variable expenses a   $56,100             $55,300      $800        F

Fixed expenses    

Sales salaries                         $40,000              $41,500     $1,500      U

Depreciation                           $10,000               $10,000      0          NA

Total fixed expenses b           $50,000             $51,500    $1,500      U

Total expenses (a+b)              $106,100             $106,800  $700        U

Therefore, if budget is more than actual then it will be favorable and if actual is more than budget then it will be unfavorable.

According to this the classification of every items is shown above.

8 0
3 years ago
You can choose between Machine A or B. Your annual interest rate is 7%. You need a machine for 6 years (required service period)
dedylja [7]

Answer:

M1 EAC =  38,576.91

M2 EAC = 29,784.89

Explanation:

The equivalent annual cost is the PMT of the present worh of the machine/investment.

<em>Machine A</em>

54,000 at year 0 then 54,000 at beginning of year 4th

and 18,000 per year

We need to bering into present the 54,000 of the fourth year

the 18,000 are already split into each year.

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity  54,000

time   3 (it is done at the beginning of the 4th year not at the end of it)

rate  0.07

\frac{54000}{(1 + 0.07)^{3} } = PV  

PV   44,080.09

54,000 + 44,080.09 = 98,080.09

Then we calculate the PMT

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

PV  $98,080.09

time 6 years

rate         0.07

98080.09 \div \frac{1-(1+0.07)^{-6} }{0.07} = C\\

C  $ 20,576.791

Now we add the annual cost of 18,000

getting 38,576.79 as annual equivalent cost ofr machine 1

<u>For machine B</u>

anual cost of 13,000

purchase of 92,000

and 18,000 salvage value at end of year 6:

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity  18,000.00

time   6.00

rate  0.07

\frac{18000}{(1 + 0.07)^{6} } = PV  

PV   11,994.16

This is positive as is a cash inflow.

net worth: 92,000 - 11,994.16

net worth: 80.005,84‬

Now, we solve for PMT:

80005.84 \div \frac{1-(1+0.07)^{-6} }{0.07} = C\\

C  $ 16,784.889

add the yearly maintenance cost of  13,000

Equivalent Annual Cost: 29,784.89

7 0
3 years ago
Kamper Company sells two products Big Z and Little Z. Current direct material and direct labor costs are detailed below. Next ye
Andrej [43]

Answer:

Explanation:

Big Z:

(a) Direct Labor $ per Unit = 19

(b) Direct Labor $ per hour = 25

(c ) Hour per unit(a/b) = 19/25 = 0.76

(d) Units in next year = 39,000

( e) Total hours (c*d)  = 0.76*39,000 = 29,640

Little Z:

(a) Direct Labor $ per Unit = 15

(b) Direct Labor $ per hour = 25

(c ) Hour per unit(a/b) = 15/25 = 0.60

(d) Units in next year = 16,000

( e) Total hours (c*d)  = 0.60*16,000= 9,600

Total estimated direct labor hours for this next year = 29,640+9600 = 39,240

7 0
3 years ago
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