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podryga [215]
3 years ago
12

Interest rates and decisions

Business
1 answer:
svetoff [14.1K]3 years ago
4 0

Answer:

a. No, the firm needs to take the volatility of short-term rates into account.

Explanation:

Short term interest rates are more volatile than the long term interest rates. If the company chooses to finance its operations solely from short term financing than it will need to incorporate the affect of volatility in the short term interest rates to identify the net returns. The volatility should be calculated with the risk factor and required rate of return of the funds.

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Frozen Delight, Inc. charges an initial franchise fee of $79,300 for the right to operate as a franchisee of Frozen Delight. Of
telo118 [61]

Answer:

Check attached file

Explanation:

6 0
3 years ago
Refer to exhibit 4-1. in a free market, ________ units of the good would be exchanged. with a price ceiling, _______ units of th
solniwko [45]
The answer is option "<span>d. 125; 75".
</span>
Free market alludes to an economy where the legislature or government forces few or no confinements and directions on purchasers and sellers. In a free market, members figure out what items are created, how, when and where they are made, to whom they are offered, and at what value—all in light of free market activity.
4 0
3 years ago
Ellis Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just comple
shusha [124]

Answer:

It is the Cost of Goods Manufactured that should be transferred to the Finished Goods account. As both of them are asset account, adding to the Finished Goods account would debit it and taking from the Work in Process account would credit it.

Date                 Account Title                                          Debit                Credit

XX-XX-XXX     Finished Goods                                $1,469,000

                        Work in Process                                                       $1,469,000

4 0
3 years ago
The common stock of ABC, Inc., has a beta of 1.13 and a standard deviation of 21.4 percent. The market rate of return is 12.7 pe
harina [27]

Answer:

The appropriate answer is "13.82%".

Explanation:

Given:

Risk free rate,

R_f=4.10

Beta of stock,

\beta=1.13

Market rate,

= 12.7

Now,

The market risk premium will be:

⇒ R_p = Market \ rate-Risk \ free \ rate

        = 12.7-4.1

        = 8.60 (%)

hence,

The cost of equity will be:

⇒ r=R_f+\beta\times R_p

      =4.10+1.13\times 8.60

      =4.10+ 9.718

      =13.82 (%)

7 0
2 years ago
Globus Autos sells a single product. 8,300 units were sold resulting in $84,000 of sales​ revenue, $24,000 of variable​ costs, a
aliya0001 [1]

Answer:

Margin of safety= 5,364 units

Explanation:

<u>First, we need to calculate the break-even point in units:</u>

Selling price= 84,000/8,300= $10.12

Unitary variable cost= $2.89

New selling price= 10.12 - 1.1= $9.02

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 18,000 / (9.02 - 2.89)

Break-even point in units= 2,936 units

<u>Now, the margin of safety:</u>

Margin of safety= (current sales level - break-even point)

Margin of safety= 8,300 - 2,936

Margin of safety= 5,364 units

8 0
3 years ago
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