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swat32
3 years ago
8

The blue giant has a profit margin of 6.2 percent and a dividend payout ratio of 40 percent. The capital intensity is 1.08 and t

he debt-equity ratio is .54. What is the sustainable rate of growth?
Business
1 answer:
Lana71 [14]3 years ago
6 0

First we calculate the return on equity(ROE) based on the Du-pont equation

ROE =  Net profit margin * Total asset turnover * equity multiplier

Total asset turnover = 1/capital intensity =1/1.08

Equity multiplier = 1+ debt to equity = 1+ 0.54 = 1.54

net profit margin = 6.2% = 0.062

ROE = 0.062*1/1.08*1.54 = 0.0884 = 8.84%

Sustainable growth rate = ROE*(1- dividend payout)

Sustainable growth rate = 0.0884*(1-0.4)

Sustainable growth rate= 0.053 = 5.3%

Sustainable growth rate = 5.30%

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An individual has utility function U(x)=x1/4U(x)=x1/4 for salary, and is considering new job offer which pays $80,000 with a bon
vladimir2022 [97]

Answer:

108,280.22

Explanation:

Certainty equivalent is solved by taking the inverse utility function from the expected utility of a random wealth variable

U(x) = x^1/4

U^-1(x) = x^4

U^-1(x) === x^4

CE(x) = x^4

Salary   Bonus   Total income   U(x)= x^(1/4)       P(x)        U(x)*P(x)

80000       0          80000               16.82                1/7             2.4

80000    10000     90000               17.32                1/7            2.47

80000    20000    100000              17.78                1/7            2.54

80000    30000    110000               18.21                 1/7            2.6

80000    40000    120000              18.61                 1/7            2.66

80000    50000    130000              18.99                1/7            2.71

80000    60000    140000              19.34                1/7             <u>2.76</u>

Sum                                                                                             <u>18.14</u>

CE(x) =  18.14^4

CE(x) = 108280.22

So therefore,  the certainty equivalent of this job offer is 108,280.22

5 0
3 years ago
A company has an opening stock of 6,000 units of output. The production planned for the current period is 24,000 units and expec
Orlov [11]

Answer:

Explanation:

                                                Last year           Current year

Selling Price                      10                         10

Varaible Price                5                         6

Contribution Margin               5                               4

Break even is the point where total cost is equal to total revenue mean no profit and loss.

company earns the contribution margin after covering the variable cost, now only fix cost remains for break even.

Break Even using FIFO method :  first In first out system

Fix Cost                                                                            =     86000

contribution from opening units(6000*5)                            =     30000

Remaining Fix cost that should be Covered from

current year products                                                            =     56000

 

Units to be sold for break-even ( 56000/4)   = 14000

so we have break even units   6000+14000 = 20000

Fix cost                              = -86000

Opening 6000*5              = 30000

Current   14000*4             = 56000

Profit                                   = 0

Break Even using LIFO method : Last in first out

Fix Cost                                                                            =     86000

Break even =  Fix Cost / Contribution margin

Break even =  86000/4 =21500

current production is 24000 which is higher than break even units so we can cover the fix cost from current year production because company is using lifo method. we do not need opening units for the break even.

4 0
3 years ago
With the introduction of robotics to automotive manufacturing, there have been sweeping changes to the automotive assembly line,
9966 [12]

Answer:

An assembly line worker with 10 years of screwing together truck panels and a high school diploma

Explanation:

The assembly worker is involved in manual work and he is most likely to lose his job due to automation. Also, since he is just a high school diploma holder, he lacks better skills to switch to higher level jobs.

3 0
3 years ago
Read 2 more answers
If the nominal interest rate is 4 percent and the inflation rate is 6 percent, then the real interest rate is a.-4 percent. b.-2
marta [7]

The real interest rate given the nominal and inflation rate is -2 percent

<h3>How to calculate the real interest</h3>

The formula for calculating real interest given the nominal and inflation rate is expressed as:

Real interest rate ≈ nominal interest rate − inflation rate

Given the following

Real interest = 4%

inflation rate = 6%

Substituting into the formula

Real interest rate = 4% -  6%

Real interest rate = -2%

Then the real interest rate given the nominal and inflation rate is -2 percent

Learn more on real interest here: brainly.com/question/25545513

7 0
2 years ago
On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was c
lutik1710 [3]

Answer:

$207,800

Explanation:

Date          Expenditure   Weight    Average

January 1   $980,000        12/12       $980,000

March 31    $1,580,000      9/12        $1,185,000

June 30     $1,256,000      6/12        $628,000

Sept. 30     $980,000        3/12        $245,000

Dec. 31       $780,000        0/12        <u>$0             </u>

Total                                                   <u>$3,038,000</u>

<u>Calculation of average interest rate for general debt</u>

                              Amount     Rate     Interest

Bonds                 $8,000,000   11%     $880,000

Long term rate   <u>$2,000,000</u>   6%      <u>$120,000</u>

Total                    <u>$10,000,000</u>            <u>$1,000,000</u>

Average interest rate = $1,000,000 / $10,000,000

Average interest rate = 10%

<u>Calculation of interest capitalized</u>

Note: General debt = $3,038,000 - $2,400,000 = $638,000

                          Average         Interest rate  Capitalized interest

Specific debt   $2,400,000            6%                 $144,000

General debt   $638,000               10%                <u>$63,800</u>

Total                                                                        <u>$207,800</u>

7 0
3 years ago
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