25. Amalgamated Products has the following operating divisions
and respective percentages of the company’s total assets:
Asset Percentage
Division (% of company’s total assets)
Chemicals 20
Polymers 30
Food Additives 50
To estimate the cost of capital for each operating division,
management has identified the following three competitors:
Estimated
Competitor Equity Beta Debt/(Debt + Equity)
Consolidated Chemicals 1.2 0.4
Mongo Macromolecules 1.6 0.2
Flavors & Fragrances 0.8 0.3
a) Assuming that the debt of all of these companies is risk-
free, estimate the asset beta for each of Amalgamated Products’
divisions. Assume that Amalgamated Products’ debt to (debt plus equity)
ratio equals 0.4. What is Amalgamated Products’ equity beta?
b) Assume that the risk-free interest rate is 3% per year and
the expected return on the Wilshire 5000 Index is 8% per year.
Estimate the cost of capital for each of Amalgamated Products’
divisions, and for Amalgamated Products as a whole.
In answering part b, is it preferable to use the asset beta
or the equity beta? Why?
c) Repeat the previous calculations assuming that every company’s
debt has a beta of 0.2. How much does each division’s and
Amalgamated Products’ cost of capital change relative to
assuming that their debt is risk-free?
Answers
a) Calculations to estimate the asset beta for each of Amalgamated Products’ divisions and Amalgamated Products’ equity beta is given below;
Asset Beta=Equity Beta [1+(1-Tax Rate) (Debt/Equity Ratio)]
Where T is the tax rate, T=40%
Chemicals:
Asset Beta=1.2 [1+(1-0.4) (0.4)] = 1.344
Polymers:
Asset Beta=1.6 [1+(1-0.4) (0.2)]
= 1.12
Food Additives:
Asset Beta=0.8 [1+(1-0.4) (0.3)]
= 1.144
Amalgamated Products’ Equity Beta:
Asset Weighted Beta = (20/100)*1.344 + (30/100)*1.12 + (50/100)*1.144 = 1.1668
b) In part b, it is preferable to use the asset beta as opposed to the equity beta. This is because the question has asked for the cost of capital for each of Amalgamated Products’ divisions and Amalgamated Products as a whole, hence the asset beta, which is reflective of the risk of the operating assets of the company, is more appropriate to use for each division.
c) With every company's debt having a beta of 0.2, the cost of capital calculations for Amalgamated Products' divisions and Amalgamated Products as a whole changes as follows:
Chemicals:
Asset Beta=1.2 [1+(1-0.4) (0.4*0.2)]
= 1.272
Polymers:
Asset Beta=1.6 [1+(1-0.4) (0.2*0.2)]
= 1.184
Food Additives:
Asset Beta=0.8 [1+(1-0.4) (0.3*0.2)] = 0.896
Amalgamated Products’ Equity Beta:
Asset Weighted Beta = (20/100)*1.272 + (30/100)*1.184 + (50/100)*0.896 = 1.0556
Note that as a result of the lower debt beta, the asset betas for each division and the asset-weighted beta for Amalgamated Products as a whole decreases.
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Related Questions
Which of the following factors makes mortgage credit necessary for most home buyers?
a. Large Transaction Amounts
b. Short payment periods c. Federal Regulation d. Lack of Available Credit
Answers
Mortgage credit is necessary for most home buyers primarily due to large transaction amounts (a).
Home purchases typically involve substantial sums of money, making it difficult for buyers to pay the full amount upfront.
Consequently, they require mortgage credit to finance the purchase and spread the cost over a longer period.
Although short payment periods (b) and federal regulation (c) can influence mortgage accessibility, they are not the main factors driving the need for mortgage credit.
Short payment periods might actually deter home buyers from seeking mortgages, while federal regulations generally serve to protect consumers and maintain market stability.
Lack of available credit (d) is not a factor that makes mortgage credit necessary; rather, it is an obstacle potential buyers may face when seeking financing. Mortgage credit itself is a form of available credit, and the necessity arises from the large transaction amounts involved in home purchases.
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a) Discuss the 3 parameters used in measuring the quantity of money b) A small town producing only Rice and Fanta, sells 30 bags of rice and 70 bottles of Fanta in a given time period. A bag of rice costs 6000 Naira while a bottle of Fanta costs 200 Naira. i) Calculate the total naira exchanged in that time period
Answers
a) Discuss the 3 parameters used in measuring the quantity of money Money supply refers to the amount of money available in an economy at a given time. It is essential to regulate the money supply to ensure stability and growth. Three parameters used to measure the quantity of money are as follows:
1. M0 - It refers to the physical currency in circulation in an economy, including the currency in commercial banks and the central bank. It is also called the narrowest definition of money supply.2. M1 - It is the broader definition of money supply than M0.
M1 includes physical currency in circulation, demand deposits, and other deposits that can be easily converted into cash.3. M2 - M2 is the broadest measure of money supply and includes all components of M1 plus time deposits, savings deposits, and other deposits that have a maturity of less than two years. M2 provides a comprehensive view of the money supply in the economy.
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How is partnership like a liability corporation?
A. Both are incorporated
B. Both have investors
C. Both are inexpensive to start
D. Both protect personal assets
Answers
Hope this helps! :)
Describe 2 companies that compete for the same customers:
Answers
Answer:
A good example would be coke and Pepsi
Explanation:
Because these two companies are both rivals they will try to out do one another in order to bring a larger income in, coke and Pepsi have been at an on going war for many years trying to gain the most customers and profit. This is because of the want and need for money therefore creating a rivalry between the two companies
Which of the following is NOT an example of a job skill?
A. attending work every day
B. being good with computers
C. being creative
D. working well in groups
Answers
Answer:
attending work everyday
Explanation:
Its not a skill its a priority.
Some examples of a job skill are being good with computers, being creative or working well with a team but attending work every day is not a skill. Therefore a is correct here.
Why do job skills matter?Job skills are important because they are those collections of skills that can help a person to complete a work. There are various kinds of work skills such as workplace skills, technical skills, transferable skills etc.
Workplace skills are those personal skills that ensure that we do our job well, for instance, teamwork. Technical skills are those skills that are required for a specific job such as coding. And transferable skills are those skills which we take from one job to another.
Some of the skills required are communication, change management, professional development, storytelling, planning, influencing, decision-making, problem-solving, and human resources.
Job seekers should always be ready to learn new skills because employers prefer such employees.
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Which of the following is the amount of money the business has earned after paying income taxes?
O Sales figures
O Costs of goods sold
O Gross profit
O Net income
Answers
Answer:
Net income is the amount of money the business has earned after paying taxes
While your hands are on home row, your left hand rests lightly on _____. z x c v j k l ; q w e r a s d f
Answers
it will rest lightly on the pinky finger on the right hand
Answer:
While your hands are on home row, your left hand rests lightly on A S D F AND The Space Bar
Explanation:
Please Mark as BRAINLIEST
The first step to be undertaken by a profit-maximizing monopolistic competitor wanting to decide what price to charge is to:________
Answers
The first step to be undertaken by a profit-maximizing monopolistic competitor wanting to decide what price to charge is to select the profit-maximizing quantity to produce.
Monopolistic competition is a type of imperfect competition in which many manufacturers are competing with each other but selling different products from each other and therefore not perfect substitutes.
Monopolistic competition exists between monopoly and perfect competition and includes firms that combine elements of both and offer similar but not identical products. Restaurants, beauty salons, household goods, and clothing are examples of industries with monopoly competition.
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BRAINLIEST AND 130 POINTS
To be eligible for Bright Futures, you must
-be accepted to a public university anywhere in the US
-be accepted to a private university anywhere in the US
-earn a standard high school diploma or its equivalent
-earn a specific amount of part time income after school
jk about the points i just wanted attention but plz help
Answers
Answer:
C
Explanation:
it is c, you are required to have a high school diploma
Velasco Co. uses a job order cost system. The following data summarize the operations related to production for July:
July
1 Materials purchased on account, $630,520
2 Materials requisitioned, $669,000, of which $76,690 was for general factory use
31 Factory labor used, $644,620, of which $91,400 was indirect
31 Other costs incurred on account for factory overhead, $147,440; selling expenses, $238,240; and administrative expenses, $150,800
31 Prepaid expenses expired for factory overhead, $30,340; for selling expenses, $25,550; and for administrative expenses, $18,210
31 Depreciation of office building was $85,350; of office equipment, $45,280; and of factory equipment, $32,530
31 Factory overhead costs applied to jobs, $374,600
31 Jobs completed, $996,810
31 Cost of goods sold, $892,790
Required:
Journalize the entries to record the summarized operations. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
Answers
The journal entries to record the summarized operations are as follows:
July 1:
Materials Inventory (debit) - $630,520
Accounts Payable (credit) - $630,520
July 2:
Work in Process (debit) - $592,310
Factory Overhead (debit) - $76,690
Materials Inventory (credit) - $669,000
July 31:
Work in Process (debit) - $553,220
Factory Overhead (debit) - $96,060
Wages Payable (credit) - $644,620
Other entries for factory overhead, selling expenses, administrative expenses, prepaid expenses, depreciation, jobs completed, and cost of goods sold would also be recorded, but the question does not specify the details for those entries.
The journal entries provided in step 1 represent the summarized operations for the month of July. These entries record the various transactions related to materials purchased, materials requisitioned, factory labor used, factory overhead costs, and accounts payable.
On July 1, materials were purchased on account for $630,520, resulting in an increase in the Materials Inventory account and a corresponding increase in the Accounts Payable account.
On July 2, materials were requisitioned for production purposes. The cost of materials used for production is debited to the Work in Process account, and the cost of materials used for general factory use is debited to the Factory Overhead account. The Materials Inventory account is credited for the total cost of materials requisitioned.
On July 31, factory labor costs are recorded. The direct labor costs are debited to the Work in Process account, and the indirect labor costs are debited to the Factory Overhead account. The Wages Payable account is credited for the total amount of factory labor used.
It's important to note that there are additional transactions mentioned in the question, such as other factory overhead costs, selling expenses, administrative expenses, prepaid expenses, depreciation, jobs completed, and cost of goods sold. However, the details for these transactions are not provided, so the journal entries for those transactions cannot be determined.
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What do you think you'd like best about working as a hospitality manager?
Answers
Answer:
Personally, what I would like best as working as a hospitality manager is to make sure everything is running smoothly, and that I get to make my guests feel welcome in my establishment. Whether it be race, religion, sex, or place of origin I would want all my guests to have a warm, comfortable stay. Like a home away from home
Explanation:
Please help me:(
Answer the following questions in your course journal or in the course discussion board:
What makes Wall Street the ideal location for the financial headquarters of the United States? Be sure to explain your answer. Would you place the center of financial activity in another
location? If so, where would that be and why?
Answers
Answer:
Wall Street consists of the largest stock exchanges, the largest financial firms, and employs thousands of people. As the trading hub of the world's biggest economy, Wall Street has an enduring impact not just on the American economy, but also on the global one.The physical location of Wall Street is in lower Manhattan, where the New York Stock Exchange is housed. The street's name refers to a long-gone wall that was erected in the 17th Century by Dutch settlers intent on keeping out the British and pirates.
I would not.
Explanation:
__________ provide alternative landing locations to congested dual-purpose airports and reduce operating costs.
Answers
Answer:
the control tower provides it
Random variations represent either increasing or decreasing movements over many years due to factors such as population growth, population shifts, cultural changes and income shifts.
Answers
Answer:
FALSE
Explanation:
THIS IS THE COMPLETE QUESTION
Trends representing either increasing or decreasing movements over many years due to factors such as population growth, population shifts, cultural changes, and income shifts are a component of a time series called "Random Variations"
Random Variation can be regarded as
tendency of an estimated size/ value of a parameter to undergo deviation randomly away from the real/ true magnitude/ value of the parameter.
If management operates to maximize the firm's profits, this will also maximize the market value of stockholders' wealth.
a. True
b. False
Answers
Answer:
b. False
Explanation:
The shareholder wealth could be maximized when there is a rise in the stock price as when the stock price rises, it automatically rised the value of the firm and the net worth also
Therefore in the given situation, in case when the firm wants to maximise its profits so it not necessary to increased the market value
Therefore the given statement is false
ANSWER ANY QUESTION YOU KNOW AND PLEASE WIRTE THE QUESTION NUMBER AND IF ITS A MULTIPLE CHOICE WRITE WHICH OPTION IT IS!!!! THANK YOU <3
Q1. A low ....... [two words] rate suggests that managers have recruited the right people for the job and that workers are happy and motivated.
Q2. If a British company established abroad pays more to a worker from the UK than to a local worker for the same job, the human resource management will face an ...... issue.
Q3. ............ is a working practice which enables employees to choose their own working hours.
Q4. A company dismisses a worker for belonging to a certain religion. What type of dismissal is this?
Q5. Which of the following is an advantage of external recruitment?:
#1 It gives internal staff a chance for promotion
#2 There is a wide choice of potential candidates
#3 The culture of the organization will be understood by the applicant
#4 It is cheaper and often quicker
Q6. A form of external recruitment that relies on luring an employee away from his or her current employer is known as:
#1 Selection
#2 Headhunting
#3 Shortlisting
#4 Removing 'dead wood'
Q7. Firms may conduct induction training of employees in order to:
#1 Gain expertise from an external authority in training
#2 Bring in new perspectives to the company
#3 Orient new hires to the company’s work environment
#4 Add to the educational credentials of employees
Q8. When a company has fluid communication because there are few levels of hierarchy, what type of organizational chart would it have?
Q9. Which of the following is an advantage of delegation?
#1 It increases spans of control
#2 It shows trust in subordinates, which can motivate them
#3 It reduces business costs
#4 The organization becomes less bureaucratic
Q10. When a company performs delayering it reduces its ..... [three words].
Q11. A .... manager is the person directly above an employee on the next hierarchical level.
Q12. If a manager is directly responsible for three workers, his .... of ..... is narrow.
Q13. What type of organizational structure has a flexible organization of employees from different departments temporarily working together on a particular project?
Q14. In a ... organizational chart the role of each individual will be clear and well-defined, and there is a clearly identifiable chain of command.
Q15. Which of the following is not a feature of the organizational chart?
#1 Bureaucracy
#2 Span of control
#3 Chain of command
#4 Levels of hierarchy
Answers
Answer:1
Explanation:
In a weighted competitive strength assessment like that shown in Table 4.3, the measures selected as indicators of competitive strength should be based on
Answers
In a weighted competitive strength assessment, the measures selected as indicators of competitive strength should be based on a variety of factors. Firstly, the measures should align with the organization's overall strategy and objectives.
The indicators should be selected in such a way that they reflect the key success factors that are essential to achieving the organization's goals.Secondly, the indicators selected should be relevant to the industry in which the organization operates. The measures should reflect the industry's key drivers of success and be comparable to the measures used by other organizations in the same industry. This ensures that the organization can benchmark its performance against its competitors.Thirdly, the indicators selected should be quantifiable and measurable. This means that the organization should be able to collect data on the measures and track its performance over time. The measures should also be verifiable, meaning that they should be reliable and valid, and that the data collected should be accurate. Fourthly, the measures selected should be able to differentiate the organization from its competitors. This means that the indicators should reflect the unique capabilities and resources that the organization possesses, which are difficult for competitors to replicate. The measures should also be sensitive to changes in the organization's competitive environment, such as new entrants, technological advancements, or changes in customer preferences.
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A country usually imposes an embargo on another country for economic reasons rather than political reasons.
True or False
Answers
Answer:
True
Explanation:
Hopefully this helps.
Answer:
False
Explanation:
Took test
ECONOMICS QUESTION: Ashley comes up with an idea that she patents, what kind of monopoly does she have?
a. Government monopoly
b. Cartel
c. Technological monopoly
d. Natural monopoly
Answers
Answer:
i think C
Explanation:
basic assumptions represent the core values of an organization and are
Answers
The basic assumptions represent the core values of an organization and are those taken for granted and highly resistant to change.
Basic assumptions are basically the source of values and what causes actions within the organization
Basic assumptions of an organization are usually not discussed, been written or easily found, but they are known.
Sometimes, the basic assumptions are sometimes taken for granted by employees but they hardly changed because they are underlying.
The basic assumptions comprises of the unconscious thoughts, beliefs, perceptions, feelings etc.
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Answer: difficult to change
Explanation:
what is the macaulay duration of a 3-year 8% annual coupon bond with $1,000 face value and yield to maturity of 8%? round to three decimal places.
Answers
The present value of each cash flow (principal and coupons) must be determined, and their weighted present values must be divided by the bond's total present value in order to get the Macaulay duration.
The steps to determine the bond's Macaulay duration are as follows: Compute the semi-annual coupon payment in step 1: Payment for a coupon is equal to the face value times the rate divided by two. For example, a payment for a coupon for $1,000 times 8% divided by two equals $40. Step 2: Determine how many semi-annual cycles there are: Periods are equal to 3 x 2 = 6. Step 3: Determine each cash flow's present value. Each coupon payment's PV is calculated as the coupon payment / (1 + YTM/2). Each coupon payment's period number PV is equal to $40 / (1 + 0.08/2). ^ PV of the period.
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The interest rate before taking inflation into account is called the: O A. annual percentage yield. OB. nominal interest rate. OC. effective rate. OD. real interest rate.
Answers
The interest rate before taking inflation into account is called the nominal interest rate. The Option B is correct.
What does nominal interest rate means?The interest rate before inflation is referred to as the nominal interest rate. The federal funds rate is the short-term nominal interest rate set by the Federal Reserve that serves as the foundation for other interest rates charged by banks and financial institutions.
It is the stated interest rate paid or earned by the lender or investor to the lender. So, if you borrow $100 at a 6% interest rate, you can expect to pay $6 in interest. The rate has been raised to account for inflation. Central banks set short-term nominal interest rates.
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what do business owners consider when they select a business ownership structure?
Answers
combinations of hand-tied and machine-made wigs and hairpieces are called
Answers
Combinations of hand-tied and machine-made wigs and hairpieces are called Semi-hand-tied.
An amalgam of hand-tied and machine-made techniques is used to create a semi-hand-tied wig. The loose fiber used in hair extensions is designed to be attached to the client's natural hair at the root.
Since they are smaller than wigs, hair pieces are available in a number of styles depending on the region that needs to be covered. Scrunchies, ponytails, clip-in fringes, and extensions are common hair accessories. One-piece and multiple-piece systems of hair are both possible.
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Which accurately describes the terms of this mortgage? Check all that apply.
Answers
Answer: 3, 4, 5.
3. Monthly payments must be made for 30 years.
4. The annual interest rate is 4.8 percent.
5. The homeowner is borrowing $200,000.
Explanation:
Nearly all entrepreneurs operate home-based businesses.
Answers
Answer:
yes they do
Explanation:
Answer:
yes they do
Explanation:
why do competitive markets work better for life insurance than for income insurance?
Answers
Answer:Because insurance market is competitive, when companies become profitable, they start adopting a more lenient underwriting criteria and lower their premiums to grab more market share.
Explanation:
Other insurance companies react by adopting the same policies, to prevent their shares taken away or to increase their market share.
Both Coca Cola and Benetton are global enterprises. Conduct online research and answer the following questions: What characteristics do these two firms display that qualify them as global enterprises?
Answers
Answer: here’s a photo of sample answer
Explanation:
Answer:
Both companies (Coca Cola and Benetton) registered as corporations, and both have a worldwide footprint across a number of countries. Both companies registered under the Companies Act of the respective countries in which they maintain a presence, and both abide by the laws and regulations of each nation.The companies operate on a large scale with huge investments in research and development, machinery, plants, and capital. They have numerous business functions that include marketing, manufacturing, market research, advertising, finance, and many more. They simultaneously work toward their core missions of generating profits, satisfying the needs of their customers, and continuously expanding their presence in current business markets and additional nations. They both raise capital from stock exchange markets.Both firms provide employment opportunities in their host nations and provide good quality products at moderate local rates. They also help in transferring resources such as raw materials and technology from advanced nations to the nations in which they operate.
Explanation:
When you are already employed, and you received your w-2 form, what do you use it for?
Answers
What are the strengths/weaknesses of hiring by consensus? (Note: But no more than four interviewers, with outside perspective)
Answers
Answer:
i can't understand bro