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andrew-mc [135]
3 years ago
9

A 10 percent three-year wage increase is provided as a 2 percent increase in the first year, 3 percent in the second year, and 5

percent in the third year. This is an example of a ________ contract.
Business
1 answer:
Ivahew [28]3 years ago
8 0

Answer:

Back-loaded

Explanation:

A back-loaded contract can be defined as a contractual arrangement between two or more parties, in which higher costs are levied or higher benefits are accrued to a project towards the end of its term (duration) as against lower costs or benefits at its beginning.

This ultimately implies that, a back-loaded contract allows lower wage adjustment in the first year with a consequent higher increase towards the end of a contract.

In this scenario, a 10 percent three-year wage increase is provided as a 2 percent increase in the first year, 3 percent in the second year, and 5 percent in the third year. This is an example of a back-loaded contract.

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The market price of a security is $50. Its expected rate of return is 14%. The risk-free rate is 6%, and the market risk premium
MatroZZZ [7]

The market price of a security is $50. Its expected rate of return is 14%, and the market price of the security  is mathematically given as

MR=27.368

<h3>What will be the market price of the security if its correlation coefficient with the market portfolio doubles?</h3>

Generally, the equation for expected rate return is mathematically given as

RR=(Rf+beta*(Rm-Rf)

Therefore

RR=(Rf+beta*(Rm-Rf)

Beta= (13-7)/8

Beta=0.75

In conclusion, the market price of a security

MR=DPs/RR

Where

Po=DPS/RR'

DPS=40*0.13

DPS=$5.23

and

RR=&+1.5*8

RR=19%

Hence

MR=$5.23/0.19

MR=27.368

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7 0
2 years ago
The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and the stock of Xyrong Corporat
koban [17]

Answer:

Risk-free rate (Rf) = 8%

Return on market portfolio (Rm) = 15%

Beta (β) = 1.2

Ke = Rf + β(Rm - Rf)

Ke = 8 + 1.2(15 - 8)

Ke = 8 + 1.2(7)

Ke = 8 + 8.4

Ke = 16.40%

Earnings per share (EPS) = $10

Current dividend paid (Do) = 40% x $10 = $4

Retention rate (b) = &6/$10 x 100 = 60% = 0.6

ROE (r) = 20% = 0.2

Growth rate (g) = b x r

                         = 0.6 x 0.2

                         = 0.12 = 12%

Current market price (Po)

= Do<u>(1 + g) </u>  

        Ke - g

= $4<u>(1 + 0.12)</u>

     0.1640 - 0.12

= $4<u>(1.12)</u>

      0.044

= $101.82

             

Explanation:

First and foremost, we need to calculate the cost of equity based on capital asset pricing model. Then, we will determine the growth rate, which is a function of retention rate (b) and return on equity(r).

Finally, we will calculate the current market price, which is dividend paid, subject to growth, divided by the excess of cost of equity over growth rate.

7 0
3 years ago
ABC Ltd. purchased a new 3-D printer for $500,000 at the beginning of year 1. Although this printer is expected to last for 10 y
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Answer:

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5 0
2 years ago
Treasures, Inc. repurchased 1,000 shares of its $1 par value common stock for $100,000. The journal entry to record this transac
Anna007 [38]

The journal entry to record this transaction includes a debit will always be to cash.

What does common stock include?

Common stock is a security that represents ownership in a corporation. In a liquidation, common stockholders receive whatever assets remain after creditors, bondholders, and preferred stockholders are paid. There are different varieties of stocks traded in the market.

What does common stock mean in a balance sheet?

Common stocks are the number of shares of a company and are found on the balance sheet. Common Stockholders are the company's owners; they have voting rights and earn dividends. They can either be company promoters, insiders, or outside investors.

How is treasury stock reported in the financial statements?

Under the cost method of recording treasury stock, the cost of treasury stock is reported at the end of the Stockholders' Equity section of the balance sheet. Treasury stock will be a deduction from the amounts in Stockholders' Equity.

What is the journal entry for treasury stock?

when shares are acquired, the Treasury Stock account is debited and the cash account is credited. When the shares are reissued, cash is debited for the proceeds and Treasury Stock is credited for the amount paid out originally.

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2 years ago
Managers are well-advised to consider whether the company can operate more profitable by selling some/all of its plant capacity
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The answer is when global demand for exclusive and private-label footwear is so far under global plant volume that it will be intolerable for most all companies to cost-effectively operate their plants at full volume for many years to come. If the prediction shows that global demand is far under global volume, then it isn't conceivable for everyone to sell everything. In this circumstance the most liquid and solvent company will appear ahead, maybe a company could hold onto volume and ferociously hold onto market share.
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