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3 years ago

V. Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect:

Business

1 answer:

Murrr4er [49]3 years ago

6 0

Answer:

3. Supply of flour to increase.

Explanation:

The situation above is showing a direct proportional relationship between the "wheat," as a main ingredient of flour, and the flour itself.

If the price of wheat decreases, suppliers will be interested in buying more of it in order to produce more quantities of flour at a lower cost because it will more likely lead to a higher profit. This will, therefore, increase the supply of flour in the market.

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Metropolitan Power and Light is a monopoly in the electrical generation and distribution industry. Since it does not face any co

____ [38]

Answer: x-inefficiency.

Explanation: Since it does not face any competition in its industry, the actions of Metropolitan Power and Light are an example of x-inefficiency which is a situation in which monopolies find themselves wherein they do not have to act efficiently since they are protected from competitive pressures. X-inefficiency is also applied to analyzing the average costs in imperfectly competitive markets whose average costs are higher than they would be if the market was more efficient.

7 0

3 years ago

One might infer from a debit balance in allowance for doubtful accounts that

shtirl [24]

Answer:

The answer is:

More accounts have been written off than had been estimated

Explanation:

Doubtful debt or bad debt is an expense. According to the rule of accounting, debit increases an expense while debit decreases an expense.

So the debit balance balance in allowance for doubtful accounts tells us that there is an increase in expense which means that more accounts(bad debt) have been written off.

So we can infer from the debit balance that more accounts have been written off than had been estimated

3 0

3 years ago

Basic bond valuation Complex Systems has an outstanding issue of $1 comma 000-par-value bonds with a 16% coupon interest rate

salantis [7]

Answer:

a. Complex Systems' bond price today = $1,476.36

Explanation:

a. If bonds of similar risk are currently earning a rate of return of 9%, how much should the Complex Systems bond sell for today?

This can be calculated by adding the Present Value of Coupons and the Present Value of Par Value as follows:

Calculation of Present Value of Coupons

The present of coupons is calculated using the formula for calculating the present value of an ordinary annuity as follows:

Present value of coupons = C × [{1 - [1 ÷ (1 + r)]^n} ÷ r] …………………………………. (1)

Where;

C = Annual coupon amount = Par value * Coupon rate = $1,000 * 16% = $160

r = required rate of return or return of similar risk = 9%, or 0.09

n = number of years = 11

Substitute the values into equation (1) to have:

Present value of coupons = $160 × [{1 - [1 ÷ (1 + 0.09)]^11} ÷ 0.09] = $1,088.83

Calculation of Present Par of Value

To calculate this, we use the present value formula as follows:

Present Value of Par Value = Par value / (1 + r)^n

Since Par Value is $1000 and r and n are as already given above, we have:

Present value of Par Value = $1,000 / (1 + 0.09)^11 = $387.53

Therefore, we have:

Complex Systems' bond price today = Present value of coupons + Present value of Par Value = $1,088.83 + $387.53 = $1,476.36

b. Describe the two possible reasons why the rate on similar-risk bonds is below the coupon interest rate on the Complex Systems bond.

The following are the possible two reasons:

1. Interest may vary bust the coupon is fixed. What can cause the interest rate to vary is the bond rating by rating agency. But his will not affect the coupon rate which is fixed. When the rating is high, the interest will be low. But when the rating is low, the interest will be high. This indicates a negative relationship between the rating and the interest rate.

2. The level of demand may also influence the interest rate to change. When the demand is high, the interest will be low. But when the demand is low, the interest will be high. This also indicates a negative relationship between the demand and the interest rate.

c. If the required return were at 16% instead of 9%, what would the current value of Complex Systems' bond be? Contrast this finding with your findings in part a and discuss.

To do this, we simply change he required return to 16% (or 0.16) in part a and proceed as follows:

Present value of coupons at 16% = $160 × [{1 - [1 ÷ (1 + 0.16)]^11} ÷ 0.016] = $804.58

Present value of Par Value at 16% = $1,000 / (1 + 0.16)^11 = $195.42

Complex Systems' bond price today at 16% = $804.58 + $195.42 = $1,000.00

Comparing part c result with part a result shows that if the coupon rate is greater than the required rate of return, the bond is sold at a premium. That is, price of bond will be more than par. As it can be seen in part a, the price of bond is $1,476.36 when the coupon rate of 16% is greater than the required return of 9%.

Also, the bond will be sold at par when the coupon rate and require return are equal. This is shown in part c where the bond is sold at $1,000 when both coupon rate and required return rate are equal to 16%.

By implication, we can also infer without doing any calculation that the bond will be sold at a discount if the coupon rate is less than the required rate of return.

7 0

3 years ago

The Sisyphean Company's common stock is currently trading for $25.00 per share. The stock is expected to pay a $2.50 dividend at

nalin [4]

Answer:

Explanation:

The Gordon constant growth dividend model =

Value = dividend / cost of capital - growth rate

Subsisting with the values given in the question gives :

25 = 2.5/0.14 - g

To solve for g,

1. multiply both sides by 0.14 - g

25(0.14 -g) = 2.5

2. divide both sides by 25

0.14 - g = 0.10

g = 0.04 = 4%

6 0

3 years ago

ERP success depends on several key factors being met. These factors include all of the following except _________. Select one: a

bonufazy [111]

Answer:

a. Minimize change for workers

Explanation:

Enterprise Resource Planning (ERP) is a method adopted by most companies to manage and integrate the various part of their business. This ERP is based on the usage of software for easier deployment of the integration and it depends on so many factors.

An ERP software system can also integrate planning, purchasing inventory, sales, marketing, finance, human resources, and more of any given business enterprise.

7 0

3 years ago