XYZ Corporation has zero-coupon debt outstanding which has a face value of $900, due in five years. The market value of the firm's assets now doubles the face value of debt. The annualized standard deviation in firm values of comparable firms is 10% on a annual basis. The five-year T-bond rate is 5%. Estimate the value of equity, using an option pricing model (keep two decimal places).
Answers
The estimated value of equity would be $1123.27.
To estimate the value of equity using an option pricing model, we can consider the zero-coupon debt as a risk-free bond and the equity as a call option on the firm's assets. The call option represents the potential upside or value of the firm's assets beyond the face value of the debt.
Using the option pricing model, we can calculate the value of the equity by subtracting the present value of the debt from the market value of the firm's assets. The present value of the debt can be calculated by discounting the face value of $900 by the risk-free rate over the five-year period.
Given that the market value of the firm's assets is double the face value of the debt, it would be $900 * 2 = $1800. The risk-free rate is 5% per year, so the present value of the debt would be $900 / (1 + 0.05)^5 = $676.73.
Therefore, the estimated value of equity would be $1800 - $676.73 = $1123.27.
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Related Questions
Question 1 of 10 If you make a plan to get a certain amount of a project done each day, what skill have you demonstrated? A. Time management B. Punctuality O C. Moral standards D. Integrity
Answers
Answer: A
Explanation: not sure, but i think its correct
Advertising, sales promotion, public relations, and buzz building activities are all ________. A) channels that should be integrated under the concept of integrated marketing communications B) channels focused more on interactive marketing than traditional marketing C) promotional tools used for push strategies but not pull strategies D) promotional tools used for pull strategies but not push strategies
Answers
Answer:
B
Explanation:
Hope it helped you1
Which of the following is a personal benefit of eaming a college degree?
A. You have more friends.
B. You are more likely to exercise.
C. You have a longer life expectancy.
D. You are more likely to vote for the right candidate.
Answers
Answer:
Option B !!!!! :))
Explanation:
Communication barriers are the different factors that disrupt messages. There are a variety of different strategies that can be used to overcome barriers in communication. You will list the five communication barriers and identify a strategy to overcome each of them. Rubric
Answers
Answer:
Explanation below
Explanation:
Language Barriers - both language and linguistic abilities can serve as barriers to communications between people. When people communicate using the same language, terminologies used in the message can form as barrier in the communication. It is best to use the language that can be rightly understood by the receiver.
Psychological Barriers – The psychological mind of the person receiving the message could serve as a barrier to communication. When people experience certain stress and personal issues, it could preoccupy their minds and that may make them not to be receptive to messages as expected. Stress management could help alleviate the challenges around this psychological barrier issues.
Physiological Barriers simply have to do with the receiver’s physical state. If the person is not hearing well maybe due to background noise, then the entire messages may not be grasped by the receiver. It is best to ensure there are no background noises.
Physical Barriers include the geographical distances between both the sender and the receiver of the message. Modern technologies have been used to reduce the impact of physical barriers.
Attitudinal Barriers are the behaviors or perceptions that hinder people from communicating effectively. Such barriers can come up as a result of personality conflicts between the people or resistance to change. It would be ideal if both parties that are communicating try to overcome their attitudinal barriers before they can communicate. Better enlightenment can be used here effectively to correct issues.
Culinary Solutions Inc. manufactures cooking and baking equipment and has its base in the country of Vandevar. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself in the country of Balalaika, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Culinary Solutions Inc. incurs huge financial losses in Balalaika. In this scenario, Culinary Solutions Inc.'s failure to establish itself successfully in Balalaika occurs most likely because
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Problem 2
Using Python3
Given a list of string (strings)
Find s short string (bigstring) that
for every s in string, s is a substring of bigstring.
Use the approximation algorithm we gave in class.
Running Time:
###############################################################
def superstring(strings):
"""
>>> superstring(["CADBC", "CDAABD", "BCDA", "DDCA", "ADBCADC"])
'BCDAABDDCADBCADC'
"""
pass
Answers
The main answer is the implementation of the superstring function in Python, which uses an approximation algorithm to find a short string that contains all the given strings as substrings.
The superstring function is implemented using an approximation algorithm. It iteratively finds the pair of strings with the maximum overlap and combines them by removing the overlapping part from the second string. This process continues until only one string remains, which is the superstring containing all the given strings as substrings. The find_overlap function calculates the length of the overlap between two strings, and the combine_strings function concatenates two strings using the specified overlap. The time complexity of the algorithm is O(n^3), where n is the number of strings in the input list.
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mig accounts for the by-product at the time of production. what are mig's cost of sales for gasoline and the byproduct for the first year of operations?
Answers
MIG accounts for the by-product at the time of production. Therefore, the cost of sales of the by-product for the first year of operations will be equal to zero.
This is because MIG already accounts for the cost of the by-product at the time of production in their regular costs of sales. Gasoline is the main product that MIG produces. The cost of sales for gasoline in the first year of operation will depend on various factors such as the cost of raw materials, labor costs, production costs, and other expenses incurred during the manufacturing process.
To accurately determine the cost of sales for gasoline in the first year of operations, MIG will need to use their accounting records and calculate the various costs incurred. This information is not provided in the question, so it is impossible to give a specific answer.
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A Stove Can be bought on hire purchase by making a deposit of $750
and 15 monthly installments of $185 each. Calculate the hire Purchase
Price of the stove
Answers
Answer:
$3,525.00
Explanation:
The hire purchase price will be the sum of the deposit and the total monthly installments.
The deposit is $750
Monthly installments =monthly fee multiplied by 15 months
=$185 x 15
=$2,775.00
Hire purchase cost will be
=$2,775.00 +$750
=$3,525.00
Where do temporary account balances go at the end of an accounting period?
Answers
Answer:
Temporary – revenues, expenses, dividends (or withdrawals) account. These account balances do not roll over into the next period after closing. The closing process reduces revenue, expense, and dividends account balances (temporary accounts) to zero so they are ready to receive data for the next accounting period.
Explanation:
Ava deposited 800 at the end of every month into RSCO for 6 years. The interest rate earned was 5.501 compounded semi-annualy for the frost 3 years and changed to 5.75\% compounded monthly for the nent 3 yeme what was the accumalutadylast value of the RRSP at the end of 6 jeas?
Answers
The accumulated value of Ava's RRSP at the end of 6 years is $62,336.15.
To calculate the accumulated value of Ava's RRSP, we need to consider the monthly deposits, the interest rates, and the compounding frequencies for the two periods.
For the first 3 years, the interest rate is 5.501% compounded semi-annually. Since Ava makes monthly deposits, we need to convert the interest rate to a monthly rate. The semi-annual interest rate is divided by 2 to get the equivalent monthly rate, which is 5.501% / 2 = 2.7505%.
Using the formula for the accumulated value of an ordinary annuity, we can calculate the accumulated value for the first 3 years:
PV = $800 (monthly deposit)
i = 2.7505% (monthly interest rate)
n = 12 (number of monthly deposits per year)
t = 3 (number of years)
Accumulated value for the first 3 years = PV * [(1 + i)^nt - 1] / i = $800 * [(1 + 0.027505)^(12*3) - 1] / 0.027505 = $27,696.63
For the next 3 years, the interest rate is 5.75% compounded monthly. Using the same formula, we can calculate the accumulated value for the next 3 years:
PV = $800 (monthly deposit)
i = 5.75% / 12 (monthly interest rate)
n = 12 (number of monthly deposits per year)
t = 3 (number of years)
Accumulated value for the next 3 years = PV * [(1 + i)^nt - 1] / i = $800 * [(1 + 0.0575/12)^(12*3) - 1] / (0.0575/12) = $34,639.52
The total accumulated value at the end of 6 years is the sum of the accumulated values for the two periods:
Total accumulated value = Accumulated value for the first 3 years + Accumulated value for the next 3 years = $27,696.63 + $34,639.52 = $62,336.15
Therefore, the accumulated value of Ava's RRSP at the end of 6 years is $62,336.15.
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other things constant, how will an increase in the wages of teenagers affect the market for fast food hamburgers?
Answers
With all else remaining constant, a rise in teens' income will have an impact on the market for fast food hamburgers by increasing the supply and lowering the cost of hamburgers.
How does the pricing change when the supply increases?While all other factors remain constant, an increase in supply will cause the equilibrium price to fall while increasing the amount required. Due to a decrease in supply, the amount sought will decrease, raising the equilibrium price.
When demand is constant, the connection between prices and supply for products and services is inverse. When the supply of those goods and services increases while the demand for those goods and services remains constant, prices frequently decline to a lower equilibrium price and a larger equilibrium quantity of those products and services.
When the cost is reduced, what happens to supply?A price increase almost invariably leads to the delivery of more of that good or service, whereas a price decrease typically results in the delivery of less of it.
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A nurse encourages employees to implement a magnet recognition program in the organization. the nurses think beyond their own personal needs and are clear about the group outcomes. which leadership quality according to gardner’s tasks is reflected in the activity of the nurse?
Answers
Answer: representing the group
Explanation:
From the question, we are informed that a nurse encourages employees to implement a magnet recognition program in the organization and that the nurses think beyond their own personal needs and are clear about the group outcomes.
The leadership quality according to gardner’s tasks that is reflected in the activity of the nurse is the representing the group. The leader sets aside their personal aim for the group.
g what is the present value today of a cash flow of 974 received in year 4, if the discount rate is 9.13% and a cashflow of 100 starting in year 6 and continuing on forever?
Answers
Using a discount rate of 9.13%, the present value of a $974 cash flow received in year 4 today is $716. A $100 cash flow that begins in year 6 and lasts forever has a $661 present value.
The formula PV = CF / (1 + r)t is used to determine the present value of a future cash flow, where PV stands for present value, CF for future cash flow, r for the discount rate, and t for the number of years before the cash flow is received. The present value for a $974 cash flow received in year 4 is $716: PV = 974 / (1 + 0.0913)4 = 716. Using the annuity formula, we can calculate a $100 cash flow that starts in year 6 and lasts forever: PV = CF / r / (1 - (1 + r)(-n)), where n is infinite. According to the formula PV = 100 / 0.0913 / (1 - (1 + 0.0913)(-infinity)) = 661, the present value of this cash flow is $661. Therefore, $716 + $661 = $1377 is the present value of the sum of these two cash flows.
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Estimated total manufacturing overhead costs $750,000
Actual total manufacturing overhead costs $ 765,000
Estimated machine hours 200,000 hours
Actual machine hours 198,000 hours
1. Using the information provided by Amilmar Inc., calculate the predetermined overhead rate. Amilmar has determined machine hours to be the appropriate cost driver to allocate overhead costs.
a. $3.79.
b. $1.02.
c. $3.75.
d. $3.86.
2. Amilmar Inc. has provided this information regarding its overhead costs. It has determined machine hours to be the appropriate cost driver to allocate overhead costs. What will be the total overhead costs applied during the year?
a. $750,000.
b. $765,000.
c. $742,500.
d. $772,727.
Answers
The predetermined overhead rate and Applied over costs are $3.75 per machine hour and $742,500
What is predetermined overhead rate?A predetermined overhead rate is an allocation rate that is used to apply the estimated cost of manufacturing overhead to cost objects.
Predetermined overhead rate
= estimated total manufacturing overhead costs / estimated machine hours
= 750,000 / 200000
= $3.75 per machine hour
Applied overhead costs
= Actual machine hours * predetermined overhead rate
= 198,000 * 3.75
= $742,500
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Richard has recently finished college and is about to prepare for his exam to become a certified public accountant. He wants to talk to other accountants to learn how best to prepare for this exam. Which professional organization would be most helpful for him to join?
Answers
Answer:
The accountant federation
How important is money
Answers
Answer:
very important
Explanation:
money is a global income source for everyone. we all have different types but it is all still money. now say one country got rid of money and had people pay for stuff using other things. if china did that lots of different countries wouldn't be able to get stuff from there unless they had so much of that product they could just give it up.
Firms A and B plan to collude in an economy for their similar products, which includes the grim strategy for punishment. They plan to set the price of their product at $8. The marginal cost of Firm A is $5 and Firm B is $4.50. If firm A is impatient to earn more profits and Firm B wishes to last in the business for the long-run, which of the following situations would likely occur? A. Firm B reduces the price to $7 causing Firm A to exit the market. B. Firm B reduces the price to $7 causing Firm A to reduce its price to $7. C. Firm A reduces the price to $7 causing Firm B to reduce its price to $4.50. D. Firm A reduces the price to $7 causing Firm B to exit the market.
Answers
Answer: C. Firm A reduces the price to $7 causing Firm B to reduce its price to $4.50.
Explanation:
Since firm A is impatient to earn more profits and Firm B wishes to last in the business for the long-run, then Firm A will reduce the price to $7 causing Firm B to reduce its price to $4.50.
Since Firm A reduces the price to $7, this will lead to an increase in the quantity demanded of the product and therefore the firm can earn more profit. On the other hand, firm B will reduce its price to a point where the price meets the marginal cost which is $4.50.
many companies state their brand promise directly in words, using a short phrase called what
Answers
Answer:Many companies state their brand promise directly in words, using a short phrase called what? A. A warranty B. A customer mindset C. A corporate image D. A tagline
✓ D.
Which is a true statement about the principles of organization?
Answers
The organizational principles are indeed similar regardless of the size of the business. This is a True statement.
The Scalar Principle, Delegation of Authority, Division of Labor, and Unity of Command. The four tenets of the organization are as follows.
The scale of a business's operations determines the production and, in turn, the number of sales it generates. You can run a business on a big scale, a medium scale, or a small scale. Return on assets, a proxy for financial performance, shows that firm size has a positive impact.
The size of a company may be a sign that it is expanding, which will cause the market to react favourably. The size or scale of a company increases as total assets and sales increase.
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what multiplication do you do to convert currency
Answers
Hope it helpss:))
Explanation:
you multiply by the exchange rate.
Which is not a responsibility of a human resources manager? Choose the answer.
Question 3 options:
revising personnel policies and procedures
revising job descriptions
maintaining company employee contact information
developing the company's strategic plan
Answers
Answer:
maintaining company employee contact information
3. The interest rate for an auto loan is actually 8% instead of 4%. Will this increase or decrease the demand for new cars? Why?
4. What are some substitutes to buying a new car?
5. Other than the price of the car, what are other costs that you should consider when buying a car?
6. Why should you research the price of similar Camry’s before selling your Camry?
7. If you decide to purchase a new car, you’ll need to sell your Camry quickly. What can you do to sell your used car faster? Why will this strategy work?
8. Other than those mentioned, what are some other factors that influence your demand for a new car?
9. Will you buy a new car, buy a slightly used car, or keep your old car?
Answers
This would decrease the demand for new cars, as the cost of financing will be higher than anticipated.
What is anticipated ?Anticipation is the expectation of something to happen in the future. It is the feeling of excitement or anxiety about a potential event or outcome. Anticipation is the sense of looking forward to something, whether it be a special occasion, a meeting, or a new experience. It is a psychological phenomenon that can be both positive and negative.
Anticipation is an important emotional experience that can be both positive and negative. It can help us to stay motivated and inspired, or it can create feelings of worry and dread. Whether it is a positive or negative experience, anticipation is an essential part of life.
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Management is considering replacing its blending equipment. The annual costs of operating the old equipment are $250,000. The annual costs of operating the new equipment are expected to be $220,000. The old equipment has a book value of $35,000 and can be sold for $25,000. The cost of the new equipment would be $260,000. Which of these amounts should be considered a sunk cost in deciding whether to replace the old equipment
Answers
Answer:
$250,000
Explanation:
Since the purchase cost of an old equipment is already incurred and it does not have any kind of impact in decision making so this cost would be considered as the sunk cost i.e. $250,000
The operating cost of old & new equipment would be relevant for calculating the annual cost savings and the current selling value of the old equipment would also be relevant as salvage value
Therefore $250,000 would be considered
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Answers
If npv is conceptually the best tool for capital budgeting, why do you think multiple measures are used in practice? what is the relationship between the profitability index and the npv? are there any situations in which you might prefer one method over the other?
Answers
Although NPV is thought to be the most reliable and theoretically sound way for analysing capital budgeting choices, managers may employ several metrics based on the particular scenario or decision being made
The process of preparing a budget defines how a company will distribute its financial resources over a specific time period. It include forecasting future income and spending, deciding on priorities, and establishing performance goals. A crucial component of financial management is budgeting, which enables businesses to keep expenditures in check, allocate resources efficiently, and make long term plans. Accurate financial data, communication across departments and stakeholders, and a clear grasp of the organization's goals and objectives are necessary for effective budgeting. Budgeting helps companies to make educated decisions, adjust to changing conditions, and maintain long-term sustainability by defining clear financial goals and tracking performance against them.budgeting
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The definition of economics states that it is the study of how _________. A. businesses make decisions and how those decisions impact other firms, the government, and consumers. B. the government determines policies, businesses set prices, and consumers choose how much to buy. C. agents choose to allocate scarce resources and the impact of those choices on society. D. money influences the economy in the short run and the long run.
Answers
Answer:
C
Explanation:
Agents choose to allocate scarce resources and tge impact of those choices in society
describe a real or made up example of a contract that includes consideration
Answers
Answer:
It is important that all contracts include consideration in order for any agreement to be legally binding.
The example of a contract of this type is:
Renting a place to use for your sales business. You rent the place for a certain period of time (Let's say one year) and for a settled amount of money. In form of a lease, is stated and stipulated what that amount of money includes (let's say just the place) and what it doesn't include (energy and water bill) as well as the rules for using and living in the place.
This contract applies for both parts once consideration is provided by accepting the terms of conditions and the value agreed.
Explanation:
But this is not my answer I have to give credit to Brainly user keylacordoba.
Which of the following will occur when wage rates decrease in a given labor market?a. The supply of labor will decrease.b. The demand for labor will increase.c. The quantity supplied of labor will decrease.d. The quantity demanded of labor will decrease.e. The supply of labor will decrease and the demand for labor will increase.
Answers
When wage rates decrease in a given labor market, the quantity demanded of labor will increase. This is because firms are now able to hire more workers at a lower cost, which increases their profitability.
Firms will demand more labor, leading to an increase in the quantity demanded of labor. Option a is incorrect because a decrease in wage rates will not lead to a decrease in the supply of labor. In fact, it may lead to an increase in the supply of labor as more workers may be willing to work for lower wages. Option c is incorrect because a decrease in wage rates will not lead to a decrease in the quantity supplied of labor. Rather, it may lead to an increase in the quantity supplied of labor as more workers may be willing to work for lower wages. Option d is also incorrect because a decrease in wage rates will not lead to a decrease in the quantity demanded of labor. Rather, it will lead to an increase in the quantity demanded of labor. Option e is partially correct, as a decrease in wage rates may lead to both a decrease in the supply of labor and an increase in the demand for labor. However, the increase in the demand for labor is the more significant effect in this case. Overall, the correct answer is option b, which states that the demand for labor will increase when wage rates decrease in a given labor market.
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Specialty Products Company has a high turnover rate among its employees, especially those
who are young parents. Solution to this problem
Answers
The company has to first investigate the reason why young parents are leaving the company. This is the first step towards resolving the issues of high turnover.
If it is because of the inability to care for their kids while at work, then the company can solve this problem by:
Turnover in human resources refers to the act of replacing one employee with a new employee. Termination, retirement, death, interagency transfers, and resignations are examples of separations between organizations and personnel.
Turnover in human resources refers to the act of replacing one employee with a new employee. Termination, retirement, death, interagency transfers, and resignations are examples of separations between organizations and personnel.
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When Tyler, a veteran, started his business, he knew he had to keep costs to a minimum and he worried about taxes. He planned to build and distribute safety goggles for construction workers and military personnel. He realized most of his business would not be through walk-in customers but rather large orders from companies. He chose to locate in a government-subsidized area called a(n) __________, where he would receive tax breaks and other government support.
Answers
Tyler chose to locate his business in an area which government offer subsized tax rate and tax break in other favor job creation called an enterprise zone.
Areas which are specially offered subsidized rate of taxes in other encourage economic development of such geographical area are called enterprise zone.
In other ensure that companies locate their offices in this zones, government offers support and gives other enticing offers in other to promote job creation in such environment.
Therefore, government - subsidized rates are enjoyed in enterprise zones.
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