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ipn [44]
3 years ago
15

A politician attempts to gain support for her campaign for city mayor by releasing a poll showing that almost 70 percent of resi

dents support her position on property taxes. What basic psychological principle is the politician using to persuade voters that she should be the next mayor?
Business
1 answer:
Dafna11 [192]3 years ago
8 0

Answer: consensus

                                   

Explanation: In simple words, it refers to the psychological phenomenon which states that the likelihood that an individual is going to perform an activity increases when he or she thinks that their potential act aligns with the willingness of others that are related to the outcomes.

In the given case, the politician is trying to persuade that majority of the voters are in his favor. This idea will generate a perception that majority are in his favor so there must be something positive in him.

Hence we can conclude that he is using consensus.

You might be interested in
If Wild Widgets, Inc., were an all-equity company, it would have a beta of 0.9. The company has a target debt-equity ratio of .4
Veronika [31]

Answer:

a. 6.5%

b. 13.06%

c. 10.91%

Explanation:

a.

Cost of debt of a bond is yield to maturity. Yield to maturity is the rate of return that a investor actually receives or a borrows actually pays on a bond. It is long term return or payment which is expressed in annual term.

Formula for yield to maturity is as follow

Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]

By placing values in the formula

Assuming the bond face value is $1,000

Yield to maturity = [ (1000x7.2) + ( 1,000 - $1,090 ) / 20 ] / [ ( 1,000 + $1,090 ) / 2 ]

Yield to maturity = [ $72 + ( 1,000 - $1,090 ) / 20 ] / $1,045

Yield to maturity = [ $72 - $4.5 ] / $1,045

Yield to maturity = $67.5 / $1,045

Yield to maturity = 6.5%

So, the cost of Debt is 6.5%

b.

As 0.9 is the unlevered beta, We need Levered beta due to restructuring of capital.

Beta Levered = Beta Unlevered x ( 1 + ( 1 - tax rate ) x Debt / Equity)

Beta Levered = 0.9 x ( 1 + ( 1 - 0.35 ) x 0.4 )

Beta Levered = 1.134

Cost of equity can be calculated using CAPM

CAPM calculated the expected return on an equity investment based on the risk free rate, market premium and risk beta of the investment.

Formula for CAPM is as follow

Expected return = Risk free Rate + Beta ( Market premium)

As we know the Risk premium is the difference of market return and risk free rate.

Expected return = Risk free Rate + Beta ( Market Return - Risk free Rate )

Ra = Rf + β ( Rm - Rf )

Ra = 4.1% + 1.134 ( 12% - 4.1% )

Ra = 13.06%

Cost of Equity is 13.06%

c.

WACC is the average cost of capital of the firm based on the weightage of the debt and weightage of the equity multiplied to their respective costs.

According to WACC formula

WACC = ( Cost of equity x Weightage of equity )+ ( Cost of debt ( 1- t) x Weightage of debt )

Placing the values in formula

If the debt to equity 0.4  the equity value should be 1 and total capital is 1.4 ( 1 + 0.4 )

WACC = ( 13.06% x 1 / 1.4 )+ ( 6.5% ( 1- 0.35) x 0.4 / 1.4 ) = 9.71% + 1.2% = 10.91%

WACC is 10.91%

4 0
3 years ago
Riverbed Company designated Jill Holland as petty cash custodian and established a petty cash fund of $236. The fund is reimburs
11Alexandr11 [23.1K]

Answer:

The journal entry is shown below:

Explanation:

According to the scenario, the journal entries for the given data are as follows:

Petty cash A/c Dr  $236

To Cash A/c $236  

(Being establishment of the fund is recorded )

Office supplies A/c Dr  $94

Misc. Expense A/c Dr $89

Cash Over / Short Dr $22             ( $236 - $31 - $89 - $94)

To Cash A/c  $205                        ( $236 - $31)

(Being Reimbursement of the fund is recorded)

5 0
3 years ago
On October 1, 2014, Mann Company places a new asset into service. The cost of the asset is $80,000 with an estimated 5-year life
Lelu [443]

Answer:

The correct answer is A.

Explanation:

Giving the following information:

On October 1, 2014, Mann Company places a new asset into service. The cost of the asset is $80,000 with an estimated 5-year life and $20,000 salvage value at the end of its useful life.

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= 60,000/5=12,000

3 months depreciation= 12,000/12*3= 3,000

3 0
3 years ago
Serotta Corporation is planning to issue bonds with a face value of $450,000 and a coupon rate of 16 percent. The bonds mature i
Brrunno [24]

Answer:

1. Dr Cash 481,588.61

    Cr Bonds payable 450,000

    Cr Premium on bonds payable 31,588.61

2. March 31

Dr Interest expense 14,447.66

Dr Premium on bonds payable 3,552.34

    Cr Cash 18,000

June 30

Dr Interest expense 14,341.09

Dr Premium on bonds payable 3,658.91

    Cr Cash 18,000

September 30

Dr Interest expense 14,231.32

Dr Premium on bonds payable 3,768.68

    Cr Cash 18,000

December 31

Dr Interest expense 14,118.26

Dr Premium on bonds payable 3,881.74

    Cr Cash 18,000

3. carrying value = $466,726.94

Explanation:

face value = $450,000

maturity = 2 years x 4 = 8 periods

coupon rate = 16% / 4 = 4%

coupon = $18,000

YTM = 12% / 4 = 3%

using a financial calculator, the PV of the bonds = $481,588.61

amortization first coupon = ($481,588.61 x 3%) - $18,000 = $3,552.34

Dr Interest expense 14,447.66

Dr Premium on bonds payable 3,552.34

    Cr Cash 18,000

   

amortization second coupon = ($478,036.27 x 3%) - $18,000 = $3,658.91

Dr Interest expense 14,341.09

Dr Premium on bonds payable 3,658.91

    Cr Cash 18,000

amortization third coupon = ($474,377.36 x 3%) - $18,000 = $3,768.68

Dr Interest expense 14,231.32

Dr Premium on bonds payable 3,768.68

    Cr Cash 18,000

amortization fourth coupon = ($470,608.68 x 3%) - $18,000 = $3,881.74

Dr Interest expense 14,118.26

Dr Premium on bonds payable 3,881.74

    Cr Cash 18,000

5 0
3 years ago
Suppose the required reserve ratio is 20 percent, and the Fed buys $1 million worth of bonds from the public. If the public depo
777dan777 [17]

Answer:

Increase directly by $1 million and an additional lending capacity of $4 million will be created for the banking system.

Explanation:

The formula for increase in money supply is

Increase in money supply = (1 / Required reserve ratio) * Excess reserve.

Now, we have, required reserve ratio of 20%.

That means, out of $1 million deposit, required reserve = ($1,000,000 * 0.20) = $200,000.

Now, we knew that, Total reserve = required reserve + excess reserve

Total Reserve = $1,000,000 and required reserve = $200,000.

So, Excess reserve = $1,000,000 - $200,000 = $800,000.

Now, Increase in money supply = (1 / 0.20) * $800,000 = $4 million.

That means,

If the public deposits this amount into transactions accounts, the money supply will:

Increase directly by $1 million and an additional lending capacity of $4 million will be created for the banking system.

7 0
3 years ago
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