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Burka [1]
3 years ago
10

The CEO of Fly Corporation decides to change an accounting method at the end of the current year. The change results in reported

profits increasing by 5%, but the company's cash flows are not changed. If capital markets are efficient, then what would happen to the company stock price? Justify your answer with logical arguments
Business
1 answer:
Angelina_Jolie [31]3 years ago
3 0

Answer:

Fly Corporation

The stock price will not be affected by the accounting change.

Explanation:

This opinion is based on the assumption that the capital markets are efficient.  Therefore, the stock's market price will reflect all available and relevant information.  Since all the necessary information is already incorporated into the stock price, the CEO of Fly Corporation cannot beat the market by the change in accounting method, and the stock price will not be undervalued or overvalued.  Moreover, the change in accounting method only shifts the timing for reporting income.

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Idk never heard of this before
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3 years ago
You got asked to analyze a 5 year project for your firm. The project produces an annual revenue of $28,500, but requires an annu
hram777 [196]

Answer:

15,300

72.70%

Explanation:

After tax cash flow = (revenue - cost - depreciation) (1 - tax rate) + depreciation

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

($20,000 - $5,000) / 5 = $3,000

($28,500 - $5,000 - $3000) x (1 - 0.4) + $3000 = $15,300

Terminal year cash flow = after tax cash flow + salvage value

$15,300 + $5,000 = $20,300

Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested

IRR can be calculated with a financial calculator  

Cash flow in year 0 = $20,000.

Cash flow in year 1 - 4= $15,300

Cash flow in year 5 = $20,300

IRR = 72.70%

To find the IRR using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.  

8 0
3 years ago
All of the following are required resources for differentiation except: Strong marketing capability. Corporate reputation for qu
zimovet [89]

Answer:

For comprehension purpose, I would attach options to the question:

All of the following are required resources for differentiation except:

A. Strong marketing capability B. Corporate reputation for quality. C. Product engineering. D. Intense supervision of labor.

The correct answer is Option D (Intense supervision of labor)

Explanation:

The differentiation asked in the question above is product differentiation.

Product differentiation, in Economics, talks about the efficient way a producer or seller of a product makes it unique in the market thereby creating an edge between the product and other similar ones or other products.

So, strong marketing capability exposes the strength and uniqueness of the product to prospective buyers which in turn brings sales.

Corporate reputation and product engineering are a strong boost in sales, as reputable companies and the physical appearance of a product tend to get easy acceptance in the market. While Intense supervision of labor may increase the efficiency of production but it is not to be considered as a resource for differentiation.

8 0
3 years ago
A ______ exists when there is a substantial difference between an expected condition and the actual condition.
KiRa [710]
The answer to this question is a problem.

Problem is a situation that everybody encounters that is needed for a solution or a specific result. Problems cannot be ignored or avoided, a person should should know how to solve it and deal with the problem once it hits you. In order to deal with problems, a person should always focus on the outcome and the possible solution to it.
5 0
3 years ago
The definition of Not Utilizing Staff Talent in the Eight Wastes refers to a. making more than the customer wants or more than y
motikmotik

Answer:

d. not encouraging employee ideas or undermining their efforts.

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The definition of Not Utilizing Staff Talent in the Eight Wastes refers to not encouraging employee ideas or undermining their efforts.

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