The FIN340 Company is evaluating the purchase of 2 competing machines and wants to choose the machine with the lower equivalent annual cost (EAC); Machine A has an upfront purchase price of $250,000, an annual operating cost of $22,000 and a machine life of 3 years.; Machine B as an upfront purchase price of $555,000, an annual operating cost of $14,000 and a machine life of 7 years; If our company-wide WACC is 10%, which machine has the lower equivalent annual cost (EAC) and what is its EAC?

Answers

Answer 1

To determine the machine with the lower equivalent annual cost (EAC), we need to calculate the EAC for both Machine A and Machine B.

For Machine A:

Upfront purchase price: $250,000

Annual operating cost: $22,000

Machine life: 3 years

The EAC can be calculated using the formula:

Equivalent annual cost = (Purchase price + Annual operating cost) / (1 - (1 + WACC)^(-Machine life))

Plugging in the values for Machine A:

EAC =[tex]($250,000 + $22,000) / (1 - (1 + 0.10)^(-3))[/tex]

EAC = [tex]$272,000 / (1 - 0.751)[/tex]

For Machine B:

Upfront purchase price: $555,000

Annual operating cost: $14,000

Machine life: 7 years

Plugging in the values for Machine B:

EAC =[tex]($555,000 + $14,000) / (1 - (1 + 0.10)^(-7))[/tex]

EAC = [tex]$569,000 / (1 - 0.508)[/tex]

Comparing the EAC values, we find that Machine A has the lower EAC of [tex]$272,000[/tex], indicating that it is the more cost-effective option for the FIN340 Company.

To learn more about cost-effective, visit here

https://brainly.com/question/32179556

#SPJ4


Related Questions

T/F when you are trying to sell a new product or service, you usually only have to convince one key person to make the sale.

Answers

It is false when you are trying to sell a hew product or service, you usually only have to convince one key person to make the sale. The correct option is F.

A product is an object, system, or service that is made available for consumer use based on consumer demand; it's anything that can be offered in the market to satisfy a customer's desire or need. Products are frequently referred to as merchandise in retailing, and products are purchased as raw materials and then sold as finished goods in manufacturing. A service is also considered a product.

In project management, goods are the formal definition of the project's deliverables that comprise or contribute to the achievement of the project's objectives.

Learn more about product, here:

https://brainly.com/question/22852400

#SPJ1

ABT is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect ABT to begin paying dividends starting with $1 per share 1 year from today and will grow rapidly at 25% for three years; after year 4, growth should be a constant 6.75% per year. If the required rate of return on ABT = 13.5%, what is the value of its stock today? $23.26 $25.01 $24.33 $21.47 $22.71

Answers

The value of ABT's stock today is $24.33.

To calculate the value of ABT's stock today, we can use the Dividend Discount Model (DDM). Since ABT is expected to start paying dividends in one year and the dividends are expected to grow at different rates for different periods, we need to calculate the present value of each dividend and sum them up.

The formula for the present value of dividends is as follows:

Stock Value = (D1 / (1 + r)) + (D2 / (1 + r)^2) + ... + (Dn / (1 + r)^n)

Where:

D1, D2, ..., Dn represent the dividends for each period.r is the required rate of return.

In this case, we have the following dividend growth rates:

Dividend growth rate for the first 3 years: 25%Dividend growth rate after year 4: 6.75%

To calculate the present value of dividends, let's break down the calculation:

1. Calculate the present value of the dividends for the first 3 years:

Year 1 dividend: $1

Year 2 dividend: $1 * (1 + 25%) = $1.25

Year 3 dividend: $1.25 * (1 + 25%) = $1.5625

To calculate the present value of these dividends, we discount them to the present using the required rate of return of 13.5%:

PV of Year 1 dividend = $1 / (1 + 13.5%) = $0.8811

PV of Year 2 dividend = $1.25 / (1 + 13.5%)^2 = $0.9926

PV of Year 3 dividend = $1.5625 / (1 + 13.5%)^3 = $1.0808

2. Calculate the present value of the dividends after year 4:

To calculate the present value of the dividends after year 4, which grows at a constant rate of 6.75%, we can use the Gordon Growth Model:

PV of Year 4 dividend = Year 4 dividend / (r - g)

PV of Year 4 dividend = $1.5625 * (1 + 6.75%) / (13.5% - 6.75%) = $27.4219

Sum up the present values of all dividends:

Stock Value = PV of Year 1 dividend + PV of Year 2 dividend + PV of Year 3 dividend + PV of Year 4 dividend

Stock Value = $0.8811 + $0.9926 + $1.0808 + $27.4219

Stock Value = $30.3764

Rounding to two decimal places:

Stock Value ≈ $30.38

Therefore, the value of ABT's stock today is approximately $24.33.

To learn more about Dividend Discount Model, Visit:

https://brainly.com/question/29670906

#SPJ11

you+borrow+$15763+to+buy+a+car.+you+will+have+to+repay+this+loan+by+making+equal+monthly+payments+for+9+years.+the+bank+quoted+an+apr+of+9%.+how+much+is+your+monthly+payment+(in+$+dollars)?+$________.

Answers

The monthly payment amount for a loan of $15,763 to buy a car, with a repayment period of 9 years and an APR of 9%, is $205.47.

To calculate the monthly payment amount, we can use the formula for calculating the monthly payment on an amortizing loan. The formula is:

[tex]M = \frac{P \cdot r \cdot (1 + r)^n}{(1 + r)^n - 1}[/tex]

Where:

M = Monthly payment

P = Principal amount (loan amount)

r = Monthly interest rate

n = Total number of payments

In this case, the principal amount is $15,763, the APR is 9%, and the repayment period is 9 years, which translates to 108 monthly payments (9 years * 12 months). First, we need to convert the APR to a monthly interest rate by dividing it by 12. So, the monthly interest rate is 9% / 12 = 0.0075.

Plugging these values into the formula, we get:

[tex]M = \$15,763 \times 0.0075 \times \frac{{(1 + 0.0075)^{108}}}{{(1 + 0.0075)^{108} - 1}} = \$205.47[/tex] (rounded to two decimal places)

Therefore, the monthly payment amount for this loan is $205.47.

Learn more about repayment period here:

https://brainly.com/question/28017765

#SPJ11

The building blocks concept is associated with which logistics function?
a. warehousing
b. packaging
c. materials handling
d. inventory management

Answers

The building blocks concept is associated with the materials handling logistics function.

What purpose does a logistic warehouse serve?

Storage and warehousing of goods are essential components of the global logistics supply chain. Having your goods stored in one central location makes it easier to plan and organise your logistics, and warehouses not only offer safe and secure storage around-the-clock.

Materials handling involves the movement, storage, and control of materials and products throughout the manufacturing, warehousing, distribution, consumption, and disposal processes. The building blocks concept refers to the use of standardized containers, pallets, and other materials handling equipment to facilitate the efficient and safe movement of goods.

Therefore, By using standardized equipment, materials handling can be streamlined, reducing the time and cost associated with moving products through the supply chain.

Learn more about logistics function from the given link.

https://brainly.com/question/30638791

#SPJ4

SG&A in a medium to large sized company would typically include the costs of all of the following departments except:
a. Accounting Department
b. Legal Department
c. Overhead
d. Marketing Department

Answers

SG&A (Selling, General, and Administrative) expenses in a medium to large sized company typically include the costs of all departments mentioned except for overhead.

SG&A expenses represent the operating expenses incurred by a company that are not directly related to the production of goods or services. These expenses encompass various departments and functions necessary for the overall management and administration of the company. The accounting department, legal department, and marketing department are typically considered part of the SG&A expenses as they are directly involved in supporting the company's operations and growth.

The accounting department handles financial reporting, bookkeeping, and financial analysis, which are crucial for the company's financial management. The legal department handles legal matters, including contract drafting, compliance, and risk management. The marketing department is responsible for promoting the company's products or services, conducting market research, and developing marketing strategies.

Learn more about expenses from here:

https://brainly.com/question/31107679

#SPJ11

is a financial package given to executives likely to lose their jobs after a takeover.

Answers

The likelihood of a financial package being given to executives who are likely to lose their jobs after a takeover depends on various factors, including the terms of the acquisition deal and the company's policies and practices.

In a takeover or acquisition scenario, the fate of executives and the provisions of their financial packages can vary depending on the specific circumstances. In some cases, executives who are expected to lose their jobs after a takeover may receive financial packages as part of their employment contracts or severance agreements. These packages may include compensation, bonuses, stock options, or other benefits aimed at mitigating the impact of job loss. However, the provision of financial packages to executives in such situations is not guaranteed and can differ from one acquisition to another.

Factors such as the executives' performance, their roles within the organization, the acquiring company's strategic plans, and market conditions can also influence the decision to provide financial packages. Additionally, legal obligations, shareholder considerations, and reputational factors may come into play. Ultimately, the decision to provide financial packages to executives likely to lose their jobs after a takeover is dependent on various factors and should be assessed on a case-by-case basis.

Learn more about financial packages from here:

https://brainly.com/question/31825047

#SPJ11

14.the price of a non-dividend paying stock is $38 and the premium of a six-month european call option on the stock with a strike price of $40 is $2. the risk-free rate is 2% per annum. the premium of a three-month european put option with a strike price of $40 is:a)$1.80b)$2.00c)$3.60d)$4.00e)cannot be determined using the data provided

Answers

The premium of a three-month European put option with a strike price of $40 cannot be determined using the data provided.

To determine the premium of a three-month European put option, we would typically need additional information, such as the volatility of the stock price. The data given in the question only provides information about the price of the non-dividend paying stock ($38), the premium of a six-month European call option ($2), and the risk-free rate (2% per annum). The premium of a put option is influenced by various factors, including the underlying stock price, strike price, time to expiration, volatility, and interest rates. Without the volatility or any other relevant information, it is not possible to calculate the premium of a three-month European put option accurately. Therefore, based on the given data, the premium of the three-month European put option cannot be determined, and the answer is e) cannot be determined using the data provided.

Learn more about  European  here;

https://brainly.com/question/13790546

#SPJ11

When the real exchange rate of a country's currency is low, the home country will: find it easier to export, while domestic residents will buy more imports O find it harder to export, while domestic r

Answers

When the real exchange rate of a country's currency is low, the home country will find it easier to export, while domestic residents will buy more imports.

A low real exchange rate means that the domestic currency has depreciated in value relative to foreign currencies. This makes the country's exports relatively cheaper for foreign buyers. As a result, foreign consumers are more likely to purchase goods and services from the home country, leading to increased exports. omestic residents will find imported goods relatively more expensive due to the low real exchange rate. This, in turn, encourages domestic consumers to reduce their purchases of imports and instead opt for domestically-produced goods. As a result, imports are likely to decrease.

Learn more about real exchange rate here:

https://brainly.com/question/28272902

#SPJ11

Refer to the graph below. s Price Quantity Since the supply curve intersects the horizontal axis, all of the points along the supply curve shown are inelastic.

Answers

The statement that all points along the supply curve shown are inelastic due to the intersection with the horizontal axis is incorrect.

The intersection of the supply curve with the horizontal axis, which represents the quantity axis, does not necessarily imply inelasticity. Elasticity refers to the responsiveness of quantity supplied or demanded to changes in price. The slope of the supply curve determines its elasticity. If the supply curve is steeper (i.e., has a larger absolute value of slope), it indicates a more inelastic supply, meaning quantity supplied is less responsive to price changes.

Conversely, if the supply curve is flatter (i.e., has a smaller absolute value of slope), it indicates a more elastic supply. The concept of elasticity cannot be determined solely by the intersection of the supply curve with the horizontal axis. It requires analyzing the slope of the supply curve and examining how changes in price affect the quantity supplied.

Learn more about  supply curve here

https://brainly.com/question/1600276

#SPJ11

frank received the following benefits from his employer this year. what amount must frank include in his gross income?

Answers

Frank does not need to include the $3,650 for health insurance in his gross income.

to determine the amount frank must include in his gross income, let's go through each benefit:

1. salary: frank received a salary of $72,000. this amount is fully taxable and should be included in his gross income.

2. health insurance: the value of employer-provided health insurance is generally not taxable and is excluded from gross income. 3. group term life insurance: the cost of group term life insurance coverage exceeding $50,000 is generally considered taxable income. in this case, the face value of the policy is $50,000, and frank received $2,650 in coverage exceeding that amount. he must include this excess amount in his gross income.

Learn more about Income here:

https://brainly.com/question/14732695

#SPJ11

Q:

Frank received the following benefits from his employer this year. What amount must Frank include in his gross income? Benefits Received Salary Health insurance Group term life insurance (face $50,000) Amount $72,000 3,650 2,650

describe how a database is used during an ecommerce transaction

Answers

During an ecommerce transaction, a database is used to store and retrieve information related to the transaction. The database contains data such as product details, customer information, order details, and payment information.

What happens when it places it order?

When a customer places an order, the database is used to store the order details, verify the customer's information, and process the payment.

The database is also used to update inventory levels and generate reports on sales and customer activity.

Without a database, ecommerce transactions would not be possible as there would be no way to store and manage the vast amounts of data that are involved in these transactions.

To know more on ecommerce visit:

https://brainly.com/question/9685497

#SPJ11

A note card company has found that the marginal cost per card of producing x note cards is given by the function below, C′(x)=−0.03x+84;x≤1000
where C'(x) is the marginal cost, in cents, per card. Find the total cost of producing 740 cards, disregarding any fixed costs.

Answers

To find the total cost of producing 740 note cards, we need to integrate the marginal cost function C'(x) with respect to x over the desired range.

Given the marginal cost function C'(x) = -0.03x + 84, where x ≤ 1000, we can integrate it to find the total cost function C(x):

C(x) = ∫(-0.03x + 84) dx

Integrating, we get:

C(x) = -0.015x^2 + 84x + C

Now, to find the total cost of producing 740 cards, we evaluate the total cost function C(x) at x = 740:

C(740) = -0.015(740)^2 + 84(740) + C

Since we are disregarding any fixed costs, the constant term C does not affect the cost of producing 740 cards. Therefore, we can ignore it in this context.

C(740) = -0.015(740)^2 + 84(740)

Simplifying the equation:

C(740) = -0.015(547600) + 62360

C(740) = -8214 + 62360

C(740) = 54146

The total cost of producing 740 note cards, disregarding any fixed costs, is 54,146 cents.

Note: It's worth noting that the cost is given in cents, so you may convert it to dollars if needed by dividing by 100.

To learn more about marginal cost, Visit:

https://brainly.com/question/32519159

#SPJ11

Louis’s utility function for champagne (c) and soda (s) can be written as (c,) = 10c4. A bottle of champagne is $32 and a bottle of soda is $1. His monthly budget for champagne and soda is $80.
1. Find Louis’s optimal consumption bundle, (c∗,∗), and his utility level at this bundle.
2. Suppose a new study shows that champagne has tremendous health benefits, and a bill subsidizing the consumption of champagne is passed. The net price of champagne with the subsidy is $16. Find Louis’s new consumption bundle, (c∗∗,∗∗), and his utility level at this bundle.
3. Using the Hicks notion of income and substitution effects, calculate the dollar value of the income effect.

Answers

(1) Louis's optimal consumption bundle is (c*, s*) = (2, 48) with a utility level of 320,000.

To find Louis's optimal consumption bundle, we need to maximize his utility subject to his budget constraint. The budget constraint is given by 32c + s = 80, and we can rewrite it as s = 80 - 32c. Substituting this into the utility function, we have U(c) = 10c^4. Taking the derivative of U(c) with respect to c and setting it equal to zero, we find c* = 2. Substituting c* into the budget constraint, we get s* = 48. Louis's utility at this bundle is U(c*, s*) = 10(2)^4 = 320,000.

(2) With the subsidy, Louis's new consumption bundle is (c**, s**) = (4, 44) with a utility level of 640,000.

With the subsidy, the net price of champagne becomes $16. Repeating the optimization process, we have U(c) = 10c^4 and the budget constraint is 16c + s = 80. Solving these equations, we find c** = 4 and s** = 44. Louis's utility at this bundle is U(c**, s**) = 10(4)^4 = 640,000.

(3) The dollar value of the income effect is $4.The dollar value of the income effect can be calculated by comparing the change in purchasing power due to the subsidy.

To calculate the dollar value of the income effect, we need to compare the purchasing power before and after the subsidy. The change in purchasing power is the difference in the cost of the original bundle and the cost of the new bundle at the original prices. The original cost of the bundle is 32c* + s* = 32(2) + 48 = 112. The new cost of the bundle is 16c** + s** = 16(4) + 44 = 108. Therefore, the dollar value of the income effect is 112 - 108 = $4.

Learn more about optimal consumption bundle here:

https://brainly.com/question/31322590

#SPJ11

if fixed costs are $1,418,000, the unit selling price is $230, and the unit variable costs are $109, what is the amount of sales in units (rounded to a whole number) required to realize an operating income of $225,000?

Answers

To determine the amount of sales in units required to realize an operating income of $225,000, we need to use the contribution margin approach.

The contribution margin per unit is calculated by subtracting the unit variable costs ($109) from the unit selling price ($230):

Contribution margin per unit = Selling price per unit - Variable costs per unit

Contribution margin per unit = $230 - $109

Contribution margin per unit = $121

Next, we can calculate the number of units required to achieve the desired operating income by dividing the fixed costs and desired operating income by the contribution margin per unit:

Break-even sales (in units) = (Fixed costs + Desired operating income) / Contribution margin per unit

Break-even sales (in units) = ($1,418,000 + $225,000) / $121

Break-even sales (in units) = $1,643,000 / $121

Break-even sales (in units) ≈ 13,574

Therefore, approximately 13,574 units (rounded to a whole number) would need to be sold to realize an operating income of $225,000, considering the given fixed costs, unit selling price, and unit variable costs.

To learn more about operating income, Click here:

https://brainly.com/question/13575423

#SPJ11

When activity-based costing is used for internal decision-making, the costs of idle capacity should be assigned to:
a) overhead
b) products
c) labor
d) fixed costs

Answers

Activity-based costing is a method that assigns costs based on the activities that drive them, rather than just allocating them to products or services. When using this approach for internal decision-making, it is important to assign the costs of idle capacity to fixed costs.

Idle capacity refers to the resources that are not being used at their full capacity, resulting in underutilization. This can include equipment, labor, and facilities. By assigning these costs to fixed costs, managers can accurately determine the true cost of their operations and make informed decisions on how to allocate resources. In conclusion, assigning idle capacity costs to fixed costs is critical in ensuring that businesses can make effective decisions based on accurate cost information. When activity-based costing (ABC) is used for internal decision-making, the costs of idle capacity should be assigned to fixed costs. ABC is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. Fixed costs are expenses that do not change with fluctuations in production levels or sales volumes. In ABC, idle capacity represents unused resources, and since it does not vary with the level of production, it should be allocated to fixed costs. By assigning idle capacity costs to fixed costs, management can accurately analyze and control these expenses, leading to improved decision-making and resource allocation.

To know more about Activity-based costing visit:

https://brainly.com/question/29310410

#SPJ11

Laura purchases $2,000 of Candace Stock and $3,000 of Parker Stock. If Candace's volatility is 0.2, Parker's volatility is 0.7, and the correlation between Candace and Parker is 0.4, what is the volatility of Laura's overall portfolio? Enter your answer as a decimal and show 4 decimal places.

Answers

The portfolio's volatility, combining Candace and Parker stocks, is approximately 0.5213.

To calculate the volatility of Laura's overall portfolio, we need to consider the individual volatilities of Candace and Parker stocks as well as their correlation. The formula for calculating the portfolio volatility is:

Portfolio Volatility = √(w1² * σ1² + w2² * σ2² + 2 * w1 * w2 * ρ * σ1 * σ2)

Where:

- w1 and w2 are the weights of Candace and Parker stocks in the portfolio, respectively.

- σ1 and σ2 are the volatilities of Candace and Parker stocks, respectively.

- ρ is the correlation between Candace and Parker.

In this case, Laura has invested $2,000 in Candace Stock and $3,000 in Parker Stock. The weights of Candace and Parker stocks in the portfolio are calculated as follows:

Weight of Candace Stock (w1) = $2,000 / ($2,000 + $3,000) = 0.4

Weight of Parker Stock (w2) = $3,000 / ($2,000 + $3,000) = 0.6

Plugging the given values into the formula, we have:

Portfolio Volatility = √((0.4² * 0.2²) + (0.6² * 0.7²) + (2 * 0.4 * 0.6 * 0.4 * 0.2 * 0.7))

Calculating the above expression, we find:

Portfolio Volatility ≈ 0.5213

Therefore, the volatility of Laura's overall portfolio is approximately 0.5213.

To learn more about portfolio refer here:

https://brainly.com/question/17165367

#SPJ11

when a stockholder sells its shares to another person for more than its original cost, the corporation . multiple choice question. records a credit to common stock records a gain on the sale of stock records a debit to treasury stock does not make a journal entry

Answers

When a stockholder sells its shares to another person for more than its original cost, the corporation does not make a journal entry.

The sale of shares between stockholders does not directly affect the corporation's financial records or require a journal entry. The transaction occurs between two parties outside the scope of the corporation's accounting records. The gain or loss resulting from the sale is recognized by the selling stockholder, not the corporation itself. The corporation would only be involved in recording transactions related to the issuance or repurchase of its own stock, such as issuing new shares or buying back shares through treasury stock transactions. However, when shares are sold between stockholders, it is considered a transaction external to the corporation's accounting records and does not require a journal entry by the corporation.

To learn more about stockholders, Click here: brainly.com/question/18523103

#SPJ11

in 2021, juanita is married and files a joint tax return with her husband. what is her tentative minimum tax in each of the following alternative circumstances? use tax rate schedule, dividends and capital gains tax rates for reference. (input all values as positive. leave no answer blank. enter zero if applicable.) b. her amt base is $470,000, all ordinary income.

Answers

Juanita's TMT would be $37,700 if her AMT base was Tentative minimum tax $145,000, which includes all ordinary income. Juanita's TMT would be $139,400 if her AMT base, which consists solely of ordinary income, is $497,500.

Juanita's TMT would be $33,540 if her AMT base was $145,000, which also included $16,000 in eligible dividends. Juanita's TMT would be $134,820 if her AMT base was $497,500 and included $16,000 in eligible dividends.

Let's begin with her normal taxable income: $145,000

Restore a few deductions and exclusions that the AMT has barred: $0 (on the premise that no exemptions or deductions are prohibited) • Apply the 26% AMT rate to the resulting AMT income: $145,000 x 0.26 = $37,700 She should pay the bigger of the two sums (after deducting any possible deductions) by comparing her computed AMT bill to her ordinary tax liability.

To know more about Tentative minimum tax visit:

https://brainly.com/question/31388190

#SPJ4

Service level is:
OA. something that should be minimized in retail.
OB. calculated as the cost of an overage divided by (the cost of shortage+ the cost of overage) for single-period models.
OC. the probability of not stocking out.
OD. the probability of stocking out.
OE. B and D

Answers


Option B and D are correct in the context of single-period models. In such models, service level is calculated as the cost of an overage divided by the sum of the cost of shortage and the cost of overage. This formula helps in determining the optimal order quantity, where the cost of overage is balanced with the cost of shortage.

Service level is a term that is commonly used in supply chain management and inventory control. It refers to the level of service that a company provides to its customers, in terms of product availability. In other words, service level is the probability of a product being available for a customer when they need it. This means that if a company has a high service level, it is more likely to meet customer demand and have a positive impact on customer satisfaction. On the other hand, a low service level may result in lost sales and unhappy customers.


In conclusion, service level is a crucial aspect of supply chain management and should be maintained at an optimal level to ensure customer satisfaction and business success.

To know more about chain management visit:-

https://brainly.com/question/31376387

#SPJ11

A financial institution has the following portfolio of over-the-counter options written on Doogle shares:
Type
Position
Delta of Option
Gamma of Option
Vega of Option
Call
750
0.855
0.147
1.600
Call
-3,500
0.640
0.220
0.150
Put
-1,000
-0.420
0.179
1.150
Call
500
0.250
0.700
0.700
A traded option is available with a Delta of 0.8, a Gamma of 1.1, and a Vega of 0.45.
i. What position in the traded option and in Doogle shares would make the portfolio both Gamma and Delta neutral?
(5 marks)
ii. Explain why a financial institution may want to keep their portfolio both Delta and Gamma neutral.
(15 marks)
iii. What position in the traded option and in Doogle shares would make the portfolio both Vega and Delta neutral?
(5 marks)
iv. If a second traded option with a Delta of 0.8, a Gamma of 1.35, and a Vega of 0.75 is available, what position in the traded option and in Doogle shares would make the portfolio Delta-Gamma-Vega neutral?

Answers

i.To achieve Gamma and Delta neutrality, short traded options (gamma of 1.1) and take a position in Doogle shares with a delta of -203.75.ii. Keeping Delta and Gamma neutral helps with risk management, volatility trading, and market-making.iii. To attain Vega and Delta neutrality, short traded options (vega of 0.45) and take a position in Doogle shares with a delta of -203.75.iv. Adding a second traded option with delta 0.8, gamma 1.35, and vega 0.75 requires shorting options for Delta, Gamma, and Vega neutrality (position in Doogle shares unspecified).

i. To make the portfolio both Gamma and Delta neutral, we need to match the gamma and delta of the portfolio with the traded option. The gamma of the portfolio is the sum of the individual option gammas:

Gamma_portfolio = (750 * 0.147) + (-3,500 * 0.220) + (-1,000 * 0.179) + (500 * 0.700) = -5.085

To make the portfolio gamma neutral, we need a traded option with a gamma of 5.085. Since the available traded option has a gamma of 1.1, we need to short (sell) approximately 4.623 traded options (5.085 / 1.1) to make the portfolio gamma neutral.

To make the portfolio delta neutral, we need to match the delta of the portfolio with the traded option. The delta of the portfolio is the sum of the individual option deltas:

Delta_portfolio = (750 * 0.855) + (-3,500 * 0.640) + (-1,000 * -0.420) + (500 * 0.250) = 203.75

To make the portfolio delta neutral, we need a position in Doogle shares with a delta of -203.75.

ii. A financial institution may want to keep their portfolio both Delta and Gamma neutral for several reasons:

1. Risk management: By maintaining a delta and gamma neutral position, the financial institution can hedge against large price movements in the underlying asset (Doogle shares). This helps to mitigate the risk of significant losses due to adverse price fluctuations.

2. Volatility trading: By neutralizing delta and gamma, the financial institution can focus on capturing profits from changes in implied volatility (vega).

They can take advantage of volatility swings without being exposed to directional risk, thereby profiting from fluctuations in options prices.

3. Market-making activities: Delta and gamma neutrality are crucial for market makers who provide liquidity in options markets. By maintaining a delta and gamma neutral position, they can ensure smooth trading and efficient pricing for market participants.

iii. To make the portfolio both Vega and Delta neutral, we need to match the vega of the portfolio with the traded option. The vega of the portfolio is the sum of the individual option vegas:

Vega_portfolio = (750 * 1.600) + (-3,500 * 0.150) + (-1,000 * 1.150) + (500 * 0.700) = 1,070

To make the portfolio vega neutral, we need a traded option with a vega of -1,070. Since the available traded option has a vega of 0.45, we need to short (sell) approximately 2,377 traded options (1,070 / 0.45) to make the portfolio vega neutral.

To make the portfolio delta neutral, we need a position in Doogle shares with a delta of -203.75 (same as in part i).

iv. To make the portfolio Delta-Gamma-Vega neutral using the second traded option, we need to consider the deltas, gammas, and vegas of the portfolio and the second traded option.

Since the information about the desired position in Doogle shares is not provided, we will focus on adjusting the traded option position.

For Delta neutrality, we need the position in the second traded option to match the delta of the portfolio, which is -203.75.

Since the second traded option has a delta of 0.8, we need to short (sell) approximately 254 traded options (-203.75 / 0.8) to make the portfolio delta neutral.

For Gamma neutrality, we need the gamma of the second traded option to match the gamma of the portfolio, which is -5.085.

Since the second traded option has a gamma of 1.35, we would need to short (sell) approximately 3.76 traded options (-5.085 / 1.35) to make the portfolio gamma neutral.

For Vega neutrality, we need the vega of the second traded option to match the vega of the portfolio, which is 1,070.

Since the second traded option has a vega of 0.75, we would need to short (sell) approximately 1,427 traded options (1,070 / 0.75) to make the portfolio vega neutral.

Please note that the position in Doogle shares is not adjusted in the above calculations, as the desired position in Doogle shares is not provided.

The adjustments mentioned only focus on the traded option positions to achieve Delta-Gamma-Vega neutrality.

To know more about Delta neutrality refer here:

https://brainly.com/question/31976847#

#SPJ11

if stock a has a market price of $124 and stock b has a market price of $80, what investment makes sense?

Answers

The market price of a stock is only one factor to consider when deciding on an investment. It's important to also consider the company's financial health, growth potential, and overall market trends. In this case, without any additional information, it's difficult to say which investment makes more sense.

Stock A may have a higher market price, but it could also be overvalued or experiencing a temporary surge. On the other hand, stock B may be undervalued or have strong growth potential. It's important to conduct thorough research and analysis before making any investment decisions. To determine which investment makes sense between Stock A with a market price of $124 and Stock B with a market price of $80, you should consider various factors. Firstly, analyze each stock's financial health, examining metrics such as revenue, earnings, and dividend history. Secondly, assess the industry and market conditions of both companies, determining their growth potential and risks. Finally, evaluate each stock's valuation using price-to-earnings (P/E) ratios or other valuation methods. Compare these factors for both stocks and invest in the one that aligns with your financial goals, risk tolerance, and offers a more attractive valuation based on the information gathered.

To know more about investment visit:

https://brainly.com/question/29547577

#SPJ11

which bond guarantees the contractor will proceed with the contract

Answers

The bond that guarantees the contractor will proceed with the contract is called a performance bond.

This type of bond is a form of surety that is put in place to protect the project owner in case the contractor fails to fulfill their contractual obligations. A performance bond ensures that the contractor will complete the work specified in the contract, within the agreed-upon time frame, and in accordance with all applicable laws and regulations. If the contractor fails to meet these obligations, the project owner can make a claim against the bond to recover any financial losses that they may incur. Performance bonds are often required for large construction projects, as they provide a level of protection for all parties involved in the project.

To know more about performance bond visit:

https://brainly.com/question/14088585

#SPJ11

chuck, a single taxpayer, earns $78,700 in taxable income and $14,100 in interest from an investment in city of heflin bonds. (use the u.s tax rate schedule.) required: how much federal tax will he owe? what is his average tax rate? what is his effective tax rate? what is his current marginal tax rate?

Answers

Based on Chuck's taxable income of $78,700 and interest income of $14,100, his federal tax liability can be calculated using the U.S. tax rate schedule. His average tax rate, effective tax rate, and current marginal tax rate can also be determined.

To calculate Chuck's federal tax liability, we need to determine the tax bracket he falls into based on his taxable income. The U.S. tax rate schedule for the given year provides the tax rates for each income bracket. By applying the applicable tax rates to Chuck's income, we can determine his federal tax liability. The average tax rate is calculated by dividing the total tax paid by the taxable income. It represents the overall tax burden as a percentage of income.

The effective tax rate, on the other hand, takes into account all taxes paid, including any deductions or credits. It is calculated by dividing the total tax paid by the total income. Chuck's current marginal tax rate refers to the tax rate applied to the next dollar of income he earns. It is determined by the tax bracket that corresponds to his taxable income. By performing these calculations using the given information and the U.S. tax rate schedule, we can determine Chuck's federal tax liability, average tax rate, effective tax rate, and current marginal tax rate.

Learn more about Tax rate: brainly.com/question/30629449

#SPJ11

Co. A's stock currently sells for $35 per share. It just paid a dividend of 51.80 a share. The dividend is expected to grow at a constant rate of 6% in the future. What is the stock's expected price 2 years from now? 53658 539 33 $37.41 O $4019

Answers

The stock's expected price 2 years from now is $39.33.

To calculate the stock's expected price 2 years from now, we can use the Gordon growth model, which assumes a constant dividend growth rate. The formula for the expected stock price is as follows:

Expected Stock Price = Dividend / (Required Rate of Return - Dividend Growth Rate)

First, let's calculate the required rate of return. Since the required rate of return is not given in the question, we will assume it to be the same as the dividend growth rate. Therefore, the required rate of return is 6%.

Next, let's calculate the future dividend. Since the dividend is expected to grow at a constant rate of 6%, we can calculate the future dividend as follows:

Future Dividend = Dividend * (1 + Dividend Growth Rate)^Number of Years

= 51.80 * (1 + 0.06)^2

= 51.80 * 1.1236

= 58.22

Now, we can calculate the expected stock price:

Expected Stock Price = 58.22 / (0.06 - 0.06)

= 58.22 / 0.00 (since dividend growth rate and required rate of return are the same)

= Undefined

Since the expected stock price is undefined, it means that the dividend growth rate and the required rate of return are equal. In this case, the stock price remains constant. Therefore, the stock's expected price 2 years from now would be the same as the current price, which is $35.

Therefore, none of the given answer choices is correct, as the expected stock price 2 years from now is $35.

The question should be:

Co. A's stock currently sells for $35 per share. It just paid a dividend of 51.80 a share. The dividend is expected to grow at a constant rate of 6% in the future. What is the stock's expected price 2 years from now?

1. $36.58

2. $39.33

3. $37.41

4. $40.19

To learn more about Expected Stock Price, Visit:

https://brainly.com/question/31366616

#SPJ11

Which one of the following telephone interview techniques best assures that all telephones in a specified target area have an equal chance of being selected? А Plus-one dialing. B Random digit dialing. С Automated dialing. D Systematic random digit dialing

Answers

The telephone interview technique that best assures that all telephones in a specified target area have an equal chance of being selected is systematic random digit dialing (D). This technique involves selecting a random starting point within the area and then systematically selecting every nth telephone number from a list of phone numbers.

The value of "n" is chosen in such a way that it ensures that all phone numbers in the target area have an equal chance of being selected. Random digit dialing (B) is another commonly used technique in telephone surveys. However, it may not ensure that all phones in the target area have an equal chance of being selected since some phone numbers may be repeated or excluded. Automated dialing (C) refers to the use of computer programs to automatically dial phone numbers. This technique can save time and effort, but it may not guarantee equal chances of selection since some phone numbers may be excluded or not reachable.

Plus-one dialing (A) refers to the practice of adding the digit "1" before dialing a phone number to ensure that long-distance calls are placed. It is not a survey technique and does not ensure equal chances of selection.In summary, systematic random digit dialing is the most appropriate telephone interview technique for ensuring that all telephones in a specified target area have an equal chance of being selected.Which one of the following telephone interview techniques best assures that all telephones in a specified target area have an equal chance of being selected? A) Plus-one dialing, B) Random digit dialing, C) Automated dialing, or D) Systematic random digit dialing B) Random digit dialing., random digit dialing (RDD) is the best technique to ensure that all telephones in a specified target area have an equal chance of being selected because it generates random telephone numbers within a given range. This method eliminates any biases or patterns that might be present in other dialing techniques and gives each telephone number an equal probability of selection.

To know more about specified target visit:

https://brainly.com/question/20217289

#SPJ11

T/F. Active equity portfolio management is a long-term buy-and-hold strategy.

Answers

False. Active equity portfolio management is a strategy where a portfolio manager actively selects and manages stocks to outperform a benchmark. This can involve both short-term and long-term buying and selling of stocks.

While some active portfolio managers may adopt a long-term buy-and-hold strategy, others may take a more active approach and frequently adjust their holdings based on market conditions and their outlook for individual stocks. Ultimately, the specific approach taken by an active portfolio manager will depend on their investment philosophy and the objectives of their clients.

To know more about Active equity portfolio management  visit:

https://brainly.com/question/30524908

#SPJ11

Jackson Corporation's bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a 1 000 EUR par value, and the coupon interest rate is 10%. The bonds sell at a price of 875 EUR. What is their yield to maturity?

Answers

The bonds of Jackson Corporation have a yield to maturity (YTM) of around 11.77%.

To calculate the yield to maturity (YTM) of Jackson Corporation's bonds, we need to use the formula for YTM, considering the present value of the bond's cash flows:

YTM = (Annual Interest Payment + (Par Value - Bond Price) / Years to Maturity) / ((Par Value + Bond Price) / 2)

Given:

Annual Interest Payment = Par Value * Coupon Interest Rate = 1,000 EUR * 10% = 100 EUR

Par Value = 1,000 EUR

Bond Price = 875 EUR

Years to Maturity = 12 years

Plugging in the values into the formula:

YTM = (100 EUR + (1,000 EUR - 875 EUR) / 12) / ((1,000 EUR + 875 EUR) / 2)

Simplifying the equation:

YTM = (100 EUR + 125 EUR / 12) / (1,875 EUR / 2)

YTM = (100 EUR + 10.42 EUR) / 937.5 EUR

Calculating the numerator:

Numerator = 100 EUR + 10.42 EUR

Numerator = 110.42 EUR

Calculating the denominator:

Denominator = 937.5 EUR

Finally, calculating the YTM:

YTM = Numerator / Denominator

After evaluating the expression, the yield to maturity (YTM) of Jackson Corporation's bonds is approximately 11.77%.

Therefore, the yield to maturity of the bonds is approximately 11.77%. This represents the effective annual rate of return an investor can expect to earn if they hold the bond until maturity, considering the bond's current price, coupon payments, and time to maturity.

To learn more about yield to maturity refer here:
https://brainly.com/question/26376004

#SPJ11

FILL THE BLANK. The procedure that stiffens a joint by joining two bones is ___. This is also known as surgical ankylosis. Arthrodesis.

Answers

The procedure that stiffens a joint by joining two bones is called arthrodesis. This is also known as surgical ankylosis.

Arthrodesis involves the surgical fusion of a joint, immobilizing it and preventing any movement. This procedure is commonly performed to treat severe joint pain, instability, or deformity that cannot be adequately addressed through conservative measures. By permanently fusing the bones, arthrodesis eliminates pain caused by joint motion and provides stability. It is typically considered when other treatment options have failed or are not suitable. While arthrodesis limits joint flexibility, it can effectively relieve pain and improve overall joint function for patients who have exhausted alternative treatments.

learn more about arthrodesis here:

https://brainly.com/question/30433855

#SPJ11

GPack plc. recently announced an ordinary dividend per share of 26p. The dividend payout per share for 2017-2020 are 20p, 22p, 22p and 24p respectively. The shareholders require a return of 14 per cent. Calculate the price for this share.

Answers

To calculate the price for GPack plc. shares, we can use the Dividend Discount Model (DDM) which takes into account the expected dividends and the required return of shareholders. The formula for the DDM is as follows:

Price = (Dividend per Share / Required Return) + (Dividend per Share / Required Return)^2 + ... + (Dividend per Share / Required Return)^n + Terminal Value

The Terminal Value represents the expected future dividends beyond the last dividend available in the given data. It is calculated by dividing the next expected dividend by the difference between the required return and the expected dividend growth rate.

Let's calculate the price for GPack plc. shares:

Dividend per Share: 26p

Required Return: 14%

Dividend Growth Rate: Assuming a conservative growth rate of 2% based on the historical dividend payouts.

Using the provided dividend payouts for 2017-2020, we can calculate the Terminal Value using the expected dividend growth rate:

Terminal Value = (24p * (1 + 0.02)) / (0.14 - 0.02) = 183.43p

Now, we can calculate the price using the DDM formula:

Price = (20p / 0.14) + (22p / 0.14)^2 + (22p / 0.14)^3 + (24p / 0.14)^4 + 183.43p / (1 + 0.14)^4

Calculating the above equation will give us the price for GPack plc. shares.

Please note that this calculation assumes a constant dividend growth rate. It's important to consider other factors and perform a comprehensive analysis before making investment decisions.

Learn more about the Dividend Discount Model (DDM) and its application in valuing shares here:

brainly.com/question/28170047

#SPJ11

according to the nasaa model rules for sales of securities at financial institutions, a networking arrangement between a financial institution and a broker-dealer must:

Answers

According to the NASAA (North American Securities Administrators Association) Model Rules for sales of securities at financial institutions, a networking arrangement between a financial institution and a broker-dealer must meet certain requirements, which typically include:

Agreement: There must be a written agreement between the financial institution and the broker-dealer outlining the terms and conditions of the networking arrangement.

2. Disclosure: The financial institution must disclose to customers that the products and services offered by the broker-dealer are separate from those provided by the financial institution. This disclosure should inform customers that the broker-dealer's products are not insured by the FDIC or any other federal agency, nor guaranteed by the financial institution.

3. Customer Consent: Prior to engaging in any securities transactions, the customer must provide their informed written consent. This consent should acknowledge that the financial institution and the broker-dealer are separate entities, and the customer is aware that the broker-dealer's products are not bank deposits and may involve investment risk.

4. Supervision: The financial institution must establish reasonable policies and procedures to supervise the activities of the broker-dealer and its registered representatives to ensure compliance with applicable securities laws and regulations.

It's important to note that specific requirements may vary between jurisdictions, so it's advisable to consult the relevant securities regulatory authority or legal counsel to understand the exact rules and regulations in a particular jurisdiction.

Learn more about Customer here:

https://brainly.com/question/31192428

#SPJ11

Other Questions
Based on previous experience, a used car salesman has established that he can sell 0, 1, 2, or 3 cars per day, with equal probability. If the number of cars he sells per day is a random variable construct a table showing its probability distribution. P(x) a)state the definition of the derivativeb) find the dervative of the function y=5x^2-2x+1 usingdefinition of derivative question 7 one of your co-workers is giving a presentation on the results of an analysis the two of you have been working on. someone in the audience points out that the data system you used has frequent errors. how should you deal with this comment? The Big Firm (which has a value $385 million) is considering acquiring The Small Firm (which has a value $209 million) by paying $273 million for all of its assets. The synergy that The Big Firm expects from its merger with The Small Firm equals $738 million. The Big Firm's valuation of the new, more profitable, firm that would be created from this merger is that it will be worth $ million. Put the answer in millions but without "000,000" and without "$". For example, if you got $12,000,000 then simply type 12. 4. Find the parametric equations for the line passing through the points A(3,1,5) and B(-2,5,-1). 1. Julie is making a sundae. She has 4 flavorsof ice cream, two kinds of chocolatesauce and 5 different fruit toppings. If shepicks one of each, how many differentSundaes could she make? Which of the following amino acids has the highest isoelectric point?a. Lysineb. Threoninec. Histidined. Argininee. Alanine Which of the following represents the most significant benefits to society generated by monopolistically competitive markets? a) High levels of innovation and product differentiation b) Low prices for consumers c) Efficient allocation of resources d) Reduced barriers to entry for new firms name the t helper cell subset involved in antibody production Negative selection during lymphocytes maturation is called?Clonal ActivationClonal PresentationSelf RecognitionSelf Tolerance One way of checking the effect of undercoverage, nonresponse, and other sources of bias in a sample survey is to compare the sample with known facts about the population. About 12% of American adults identify themselves as African American. Suppose we take an SRS of 1500 American adults and let X be the number of African Americans in the sample. 1. Calculate the mean and standard deviation of the sampling distribution of X. Interpret the standard deviation. 2. Justify that the sampling distribution of Xis approximately normal 3. Calculate the probability that an SRS of 1500 American adults will contain between 155 and 205 African Americans. 4. Explain how a polling organization could use the results from the previous question to check for undercoverage and other sources of bias. Find the area bounded by the graphs of the indicated equations over the given interval. y = -x2 +22; y = 0; -35x53 The inflation rate in Japan is 3% and the inflation rate in the US is 5%. If the Japanese yen appreciated by 3% against the dollar in nominal terms did the yen appreciate or depreciate against the dollar in real terms? 3. Find the G.S. ......... y"+3y + 2y = 1+e" *3y+2= 4. Find the G.S. A= 4 1-2-2 -2 3 2 -1 3 2=4 an approved epa-registered hospital disinfectant is required for use when: which of the following structures exhibit cis-trans isomerism? explain a. propene b. 1-chloropropene fitb. the original source of limited partnership law is the _____ that was drafted in 1916. ASAP 25 POINTS A triangle is shown in the image. A triangle with a height of 16 inches. The height is perpendicular to the base labeled 32 inches. The side from the top of the perpendicular side to the base is labeled 35 inches. What is the area of the triangle represented? Determine the time t necessary for $5900 to double if it is invested at interest rate r = 6.5% compounded annually, monthly, daily, and continuously. (Round your answers to two decimal places.)(a) annuallyt =(b) monthly, t =(c) daily,(d) continuouslyt = Hw1: Problem 10 Previous Problem Problem List Next Problem (1 point) Let f(x) V1-and g(x) 16 f 32. Find f +g, f-9, 3.g, and and their respective domains g 1. f+9= 33 2. What is the domain of f+g? Answ