RKE & Associates is considering the purchase of a building it currently leases for $30,000 per year. The owner of the building put it up for sale at a price of $170,000, but because the firm has been a good tenant, the owner offered to sell it to RKE for a cash price of $160,000 now. If purchased now, how long will it be before the company recovers its investment at an interest rate of 15% per year?
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Q4. RKE & Associates is considering the purchase of a building it currently leases for $30,000 per year. The owner of the building put it up for sale at a price of $170,000, but because the firm has been a good tenant, the owner offered to sell it to RKE for a cash price of $160,000 now. If purchased now, how long will it be before the company recovers its investment at an interest rate of 15% per year?(Do not use excel)
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- 5. The manager of a fast-food restaurant featuring hamburgers is adding salads to the menu. If they choose to include a salad bar (i.e., the MAKE option), it will cost $14,000 in annual fixed costs for the leased equipment and added employee, and $1 per salad variable cost. If they choose to have pre-made salads (i.e., the BUY option), it will cost $3 per salad. The manager expects to sell 7,500 salads per year. What is the make or buy quantity (i.e., the breakeven point between making vs. buying)?D&R A3 1-1 Question 1. Plain Vanilla Interest Rate Swap Incredible Inc., a manufacturer of children’s toys, enters into a two-year plain vanilla interest rate swap, in which the corporation will receive a fixed rate and pay a floating rate of LIBOR. The notional amount on this swap is $75 million. Swap payments will be netted every 180 days, and the LIBOR requires the assumption of a 360-day year. The term structure of LIBOR on the swap initiation date is as follows: Days Rate (%) 180 3.50 360 3.55 540 3.60 720 3.70 What is the fixed rate determined on the swap initiation date?Q4) Jackson Hole Manufacturing is a small manufacturer of plastic products used in theautomotive and computer industries. One of its major contracts is with a large computercompany and involves the production of plastic printer cases for the computer company’sportable printers. The printer cases are produced on two injection molding machines. The M-100machine has a production capacity of 25 printer cases per hour, and the M-200 machine has aproduction capacity of 40 cases per hour. Both machines use the same chemical material to produce the printer cases; the M-100 uses 40 pounds of the raw material per hour and the M-200uses 50 pounds per hour. The computer company asked Jackson Hole to produce as many of thecases during the upcoming week as possible; it will pay $18 for each case Jackson Hole candeliver. However, next week is a regularly scheduled vacation period for most of Jackson Hole’sproduction employees; during this time, annual maintenance is performed for all equipment inthe…
- Decision Under Uncertainty The digital television service company TV-más is facing a significant problem of customer loss in recent months, in particular, customers of the Home plan, which consists of an annual subscription whose value is $200 and that allows you to watch more than 40 high definition television channels. The company has prepared a list of clients who have decided that once the subscription has ended, they will not contract the service again, since, among several reasons , they maintain that the company does not treat its clients well. Considering customer opinions, the company has thought of a plan so that customers who have decided not to renew can reverse their decision and subscribe to the service for one more year. The plan consists of giving a gift to customers who have decided not to renew in order to show concern for them. The gift consists of a set of kitchen pots, with the company logo, which costs the company $50. According to information from a pilot plan…Q1) A retail. Store stocks two types of shirts A and B. These are packed in attractive cardboard boxes. During a week the store can sell a maximum of 400 shirts of type A and a maximum of 300 shirts of type B. The storage capacity, however, is limited to a maximum of 600 of both types combined. Type A shirt fetches a profit of SR 2/- per unit and type B a profit of SR. 5/- per unit. (b) Find the optimal solution (How many of each type) that store should stock per week to maximize the total profit. Use Graphical Method.Question 2 Target Ltd produces a single product. The company has employed the services of a statistical firm to develop cost functions that will assist in arriving at the optimal price that will enable the company to maximize profits. During November 2018, you were provided with the following demand and costs functions for the product: Demand function: P=60+2Q, where P is the unit selling price and Q is quantity of units in thousands. Cost function: TC= 3Q2 - 2Q + 200, where TC is total costs in thousands of dollars. Required: Find the output at which profit is maximized. Find the optimal price that maximizes profit. Determine the optimal sales revenue Calculate the maximum profit Briefly outline three (3) factors to be considered when settingprices for the company’s products.
- D & R A1 10 - 6 Question 10. Minimum Variance Commodity Hedge Choc Full of Good Inc., a producer of powdered hot chocolate, has just received a large order that will require the purchase of 800 metric tons of cocoa in 3 months. The current spot price of cocoa is US $3,055 per metric ton. The standard deviation of the change in spot cocoa price is 0.2. Mr. Dulce, the CFO of Choc Full, is considering a minimum-variance hedge of this future cocoa purchase using the three-month cocoa futures contract. The contract size is 10 metric tons. The standard deviation of the change in cocoa futures price is 0.25. The covariance between the change in the spot and futures cocoa price is 0.035. The annually compounded interest rate faced by the company is 5%, the three-month storage cost is $2.5 per metric ton, and the convenience yield is $0.5 per metric ton. What is the estimated effectiveness of this minimum variance hedge?D&R A3 3 - 2 Question 3. FRA Pricing, Valuation, Payoff, and Hedging Today is June 1. Sustainable Corporation has an obligation of $25 million coming due on August 1. The company is planning to borrow this amount on August 1 to fulfill its obligation, and plans to pay back the loan on December 1. The company’s borrowing rate is LIBOR + 125 basis points. The company’s bank presents it with the following LIBOR term structure: # days LIBOR 30 0.90% 60 1.00% 90 1.05% 120 1.10% 150 1.15% 180 1.18% 210 1.20% 240 1.21% For the calculation of interest, the bank assumes 30 days in a month, and 360 days in a year. Ms. Devro, the VP Finance of Sustainable, is worried that LIBOR will increase between June and August, thus increasing the company’s borrowing cost. She advises that the company enters into a forward rate agreement (FRA) with its bank to hedge its interest rate risk. She has asked you, the treasurer of the company, to…Q)6. Which of the following is NOT a correct description of the PESTLE model? Group of answer choices “E” in the PESTLE model stands for “Economic”. The factors to consider is the positive or negative impact of the big five forces. “P” in the PESTLE model stands for “Political”. The factors to consider is the positive or negative impact of a given event such as the outcome of an election. “E” in the PESTLE model stands for “Environmental”. The factors to consider is the positive or negative impact of natural environment related concerns. “L” in the PESTLE model stands for “Legal”. The factors to consider is the positive or negative impact of a given change in legislation.
- #6) A group of medical professionals is considering constructing a private clinic. If a patient demand for the clinic is high, the physicians could realize a net profit of $120,000. If the demand is low, they could lose $55,000. Of course, they do not have to proceed at all, in which case there is no cost. In the absence of any market data, the best the physicians can guess is that there is a 50-50 chance the demand would be high. a) Create a decision tree. b) What should the medical professionals do? What is the payoff? c) The physicians have been approached by a market research firm that offers to perform a study of the market at a fee of $5,000. The market researchers claim that their experience enables them to use Bayes’ theorem to make the following statements of probability: -probability of high demand given a positive survey result = 0.82 -probability of low demand given a positive survey result = 0.18 -probability of high demand given a negative survey result = 0.11…470 q 16 a speculative stock possessees a _________ probability of _________ return and is currently _______- a. high, negative, underpriced b. high, negative, overpriced c. high, positive, overpriced d. low, negative, overpriced e. low, positive, underpricedSubject; Leadership Q#1: Osmanli Solutions (Pvt) Ltd is a leading software house of Istanbul and has recently opened its development center in Karachi and has hired you as the General Manager of the Karachi division. The top executives at the headquarters of Osmanli Solutions (Pvt) Ltd feel that they have surplus workforce at their Istanbul office and therefore wants to transfer the surplus workforce to Karachi office in order to reduce the operational cost of their Istanbul office. Under these circumstances, you found yourself in a position that 30% of the entire workforce at Karachi office will consists of those employees who are to be transferred from the Istanbul office. What will be your concerns as the leader of the Karachi unit under these circumstances. How will you deal with the situation?