#617 Brooks Enterprises has never paid a dividend

Brooks Enterprises has never paid a dividend - Business Statistics

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Brooks Enterprises has never paid a dividend. Free Cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 8%. The company's weighted average cost of capital is 12%.

What is the terminal, or horizon value of operations, find the value of all free cash flows beyond year 2 discounted back to year 2.

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Free Chegg Answer 1

value of operation when FCF is expected to grow at 7% rate
Terminal value = Vn = FCF2(1+g)/WACC - g

V2=$100,000(1+.08)/.12-.08

V2 = $2,700,000

Value of operation = Vo = PV of expected future free cash flow
Vo = FCF1/(1+WACC)^1 + FCF2/(1+WACC)^2 + terminal value/(1+WACC)^2

V0 = $80,000/(1+.12)^1 + $100,000/(1+.12)^2 + $2,700,000/(1+.12)^2

V0 = $71,428.57 + $79,719.39 + $2,152,423.47 = $2,303,571.43 

#616 Free Cash Flow Valuation Dozier Corporation is a fast

Free Cash Flow Valuation Dozier Corporation is a fast  - Business Statistics

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Free Cash Flow Valuation

Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 8% rate. Dozier's weighted average cost of capital is WACC = 13%.

1. What is Dozier's terminal, or horizon, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) Round your answer to two decimal places.
   
   $   million
   
   
2. What is the current value of operations for Dozier? Round your answer to two decimal places. Round intermediate calculations to two decimal places.
   
   $   million
   
   
3. Suppose Dozier has $10 million in marketable securities, $100 million in debt, and 10 million shares of stock. What is the intrinsic price per share? Round your answer to the nearest cent. Round intermediate calculations to two decimal places.

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Free Chegg Answer 1

Vo = FCF1/(1+WACC)^1 + FCF2/(1+WACC)^2 + FCF3/(1+WACC)^3

Vo = -$20/(1+.13)^1 + $30/(1+.13)^2 + $40/(1+.13)^3

Vo = -$17.70 + $23.49 + $27.72 = $33.52

value of operation when FCF is expected to grow at 8% rate

Vo = FCF3(1+g)/WACC - g

Vo = $40(1+ 0.08)/0.13 - 0.08

Vo = $864

Current value of operation = -$20/(1+.13)^1 + $30/(1+.13)^2 + $40/(1+.13)^3 + $713.33/(1+.13)^3

Current value of operation = $527.89

Intrinsic value of firm = current value of operation + marketable securities - debt

Intrinsic value of firm = $527.89 + $10 -$100 = $417.89

Intrinsic price per share = $437.89 million/10 million = $43.79

Free Chegg Answer 2

The following are the data inputs in spreadsheet:

The following are the obtained results in spreadsheet:

#574 There are three reasons why people demand

There are three reasons why people demand - Business Statistics

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There are three reasons why people demand money: for use in transactions, for precautionary reasons (meaning in case of emergencies), and for speculative safety (meaning in case some investments drop in value). Give an example of a time when you demanded money for each of these reasons. Describe the specific circumstances of your demand for money. Please answer in 150 words or more

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Yes, I got to demand money for all of the occasions at various circumstances and were during the first case or for transactions, got to demand money numerous times including buying coffee or groceries, for paying my school fee, paying my electricity bill, etc. In the second case or in case of emergencies, I had to attend a meeting where I met with an accident and there was a medical issue after which demanded an operation 10 days after my accident and I was pre-informed about it for which I took the money from the bank or rather I got to demand money on the whole for these emergency purposes so that I could use it for the emergency purposes on the whole and after this, the third form of demanding money is during speculation where it can be mentioned that I invested money in share market where I felt that the share price could drop down and that is the reason why I got to demand money at that time and withdraw my investment and in this way, I demanded money in all the three ways possible.

#553 Discuss four types of risks involved in international

Discuss four types of risks involved in international - Business Statistics

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Discuss four types of risks involved in international business. Pick a country of your choice and explain the intensity of these business risks in that country with valid reasons

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Any business comes with great risk involved in it, the same is the situation with International business. Some risks are as follows

1. Political Risk - Politics of the nation affects the business of any nation and international business. Political decisions and policies of the present government have a large impact on business. If there is political instability then nothing can survive from loss.

2. Foreign Exchange Risk - Policies of governments and international organizations such as IMF decides the fate of the international business. There is a risk of fluctuations in forex exchange shortfall which can affect business largely.

3. Protectionism- Governments can decide about the economy and trade weather to keep the market open for international firms or protect local businesses from multinational companies.

4. Cultural Risk- There has to be a risk for business because of cultural diversity in the world which gives less chance to some businesses to flourish.

In a country like India which is a developing nation with a large population and diversity, these risks can be observed very clearly.

In India, there have been many instances of political instability which had affected international business. India faced a Foreign exchange crisis in 1991 due to a balance of payment crisis. Government and central bank need to manage foreign exchange to reduce the risk.

In India, the Risk of protectionism can be observed because many local companies have got the upper hand for survival from multinational companies. Also, the Cultural risk in India is very much active because of the diversity of languages, foods, castes, religion gives a risk in international business as everything affects the market as a whole.

#551 What is the marginal propensity to consume

What is the marginal propensity to consume - Business Statistics

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Answer the following questions about marginal propensity to consume and the multiplier. First, provide the correct equation and then show your work to arrive at the answer:

What is the marginal propensity to consume when consumption changes from 7 to 6 and disposable income changes from 5 to 3?

If disposable personal income is 10 and consumption is 12, what is personal savings? What does this mean?

What is the multiplier when the change in the equilibrium level of real GDP in the aggregate expenditures model is 9, and the change in autonomous aggregate expenditures is 3?

What is the multiplier when the marginal propensity to save is 1/3?

What would happen to the marginal propensity to save when a tax cut was enacted causing the multiplier to change to 5?

The following criteria will be used to grade the papers:

Correct equations are used and shown

Explanations are correct

Calculations are correct.

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What is the marginal propensity to consume when consumption changes from 7 to 6 and disposable income changes from 5 to 3?

MPC=change in consumption/change in income

Here change in consumption = 7-6=1

Change in income=5-3=2

Hence, MPC=1/2=0.5

If disposable personal income is 10 and consumption is 12, what is personal savings? What does this mean?

Disposable income = Consumption +savings

Thus, if disposable income =10, c=12, then we can find savings

Savings = disposable income –consumption

Savings = 10-12=-2

Savings =-2

What is the multiplier when the change in equilibrium level of real GDP in the aggregate expenditures model is 9, and change in autonomous aggregate expenditures is 3?

Multiplier = 1/1-MPC

MPC=0.5

Thus multiplier = 1/1-0.5

=1/0.5=2

What is the multiplier when the marginal propensity to save is 1/3?

If MPS = 0.33(1/3=0.33), then MPC = 1-0.33 (MPS=MPC=1)

MPC=1-0.33=0.67

Multiplier = 1/1-MPC

                =1/1-0.67

                =1/0.33

                =3.03

Multiplier =3.03

What would happen to the marginal propensity to save when a tax cut was enacted causing the multiplier to change to 5?

Multiplier =5

Multiplier=1/1-MPC

Here 5=1/1-MPC

Thus,

1-MPC=1/5=0.2

1-MPC=0.2

MPC=1-0.2=0.8

MPS=0.2

#550 The Federal Reserve has currently set the reserve

The Federal Reserve has currently set the reserve - Business Statistics

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BSW Bank currently has $100 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 8 percent of transaction deposits.

A. If the Federal Reserve decreases the reserve requirement to 4 percent, show the balance sheet of BSW and the Federal Reserve System just before and after the full effect of the reserve requirement change. Assume BSW withdraws all excess reserves and gives out loans, and that borrowers eventually return all of these funds to BSW in the form of transaction deposits. (Do not round intermediate calculations. Enter your answers in millions rounded to the nearest dollar amount.)

Panel A: Initial balance sheets 

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#549 BSW Bank currently has $900 million in transaction

BSW Bank currently has $900 million in the transaction - Business Statistics

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BSW Bank currently has $900 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 8 percent of transaction deposits.

A. If the Federal Reserve decreases the reserve requirement to 5 percent, show the balance sheet of BSW and the Federal Reserve System just before and after the full effect of the reserve requirement change. Assume BSW withdraws all excess reserves and gives out loans, and that borrowers eventually return all of these funds to BSW in the form of transaction deposits. (Do not round intermediate calculations. Enter your answers in millions rounded to the nearest dollar amount.)

Panel A: Initial balance sheets

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#547 Find three ads for EACH concept bearing

Find three ads for EACH concept bearing - Electrical Engineering

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Find three ads (print or TVC’s) for EACH concept bearing                                                          

1. Achievers
2. Believers
3. Product-specific segmentation

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Free Chegg Answer

Vals is known as values attitude and lifestyle which one of the ways of performing psychographic segmentation. Let's discuss the given thing in detail

Achievers:

They are motivated by achievement and they are always goal-oriented, They are interested to buy a brand that is getting success over time. The opted advertisement for them is Apple Inc, Volkswagen cars, and Cartier Jewelry advertisement, by which they feel the privilege to have it and feel that this is one of the most successful brands in the world.

Believers:

They are motivated by ideals and they are conservative rely on spirituality and faith. They have beliefs on traditional codes like family, religion, and community, They mostly preferred word of mouth consumers and Find advertisement as a legitimate source of information. So an example for this will be Google Pay, Old Navy apparel brand, and Amazon advertisement since they feel it is a tradition for safe since this brand is being in the market for a long time

Product-specific segmentation:

Product-specific segmentation drives the segment based on purchase motivation and product benefits. They target the particular group who is in need of a specific product, for example, the Biju learning app, Telsa Electric cars, and L’Oreal Paris skin care products which is a Product-specific segmentation targeting the school and college students in their advertisements

i hope it helps..

If you have any doubts please comment and please don't dislike.

#541 What are demand deposits and why should

What are demand deposits and why should - Business Statistics

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1. What are demand deposits and why should they be included in the stock of money? (1 Mark) (Word count: 100 words max.) 

2. Explain whether each of the following events increases or decreases the money supply.
   1. The State Bank of Pakistan sells bonds in open-market operations. (0.5 Marks) 

2. The State Bank of Pakistan increases the reserve requirement. (0.5 Marks)

3. The State Bank of Pakistan reduces the interest rate it pays on reserves. (0.5 Marks)

4. MCB Bank repays a loan it had previously taken from the State Bank of Pakistan. (0.5 Marks)

5. After a rash of pickpocketing, people decide to hold less currency. (0.5 Marks)

6. Fearful of bank runs, bankers decide to hold more excess reserves. (0.5 Marks (kindly give answer of both parts A and B)

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First, let us focus on the constituents of the Ham and cheese sandwich, Ham is a source of protein, cheese contains saturated fat and protein and calcium. Brown bread has carbohydrates and other nutrients.

Let's start the process of digestion.

first, as soon as a bite of the sandwich is taken the salivary glands produce saliva which moistens and softens the food, ptyalin of the saliva breaks the starch component of the sandwich and converts it into disaccharides.

From here the chewed sandwich through the esophagus reaches the stomach.

Gastric juices present in the stomach play a significant role in protein digestion. The action of hydrochloric acid activates certain enzymes now the sandwich in the stomach is acted upon by various protein-digesting enzymes like pepsin.

pepsin acts on the protein and breaks the protein in the ham into peptones and proteases. Apart from this mechanical digestion through the pounding action occurs in the stomach so the sandwich is partially digested by the action of these enzymes.

From the stomach through the pyloric valve chyme passes into the small intestine.

The small intestine receives secretions from the liver and pancreas

The sandwich had cheese which is saturated fat, the bile salts released from the liver helps in the emulsification of fats. so the cheeses are emulsified and the acidity of the chyme is made alkaline by the bile.

The Ham which is high in protein will be exposed to many proteolytic enzymes from the pancreatic juice. the meat is exposed to trypsin, chymotrypsin, carboxypeptidases which act on the Ham and convert it into simple peptides and proteoses.

The steapsin present in the pancreatic juice acts on the emulsified fat of the cheese and converts it into fatty acid and glycerol.

Now the carbohydrate portion of the bread is digested by the sucrase, maltase, lactase enzymes present in the intestinal juices which convert them into glucose and it is absorbed through the intestinal wall.

So the digestion of the carbohydrate, Fats, Proteins occurs in the small intestine. the undigested food now enters the large intestine and the sandwich also had lettuce which is the cellulose part of the food is decomposed by the symbiotic bacteria and the remaining carbohydrates are fermented releasing hydrogen and methane.

and finally, the faces are formed and release outside.

#532 You are working in an investment advisory firm where your primary

You are working in an investment advisory firm where your primary - Business Statistics

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Q3) You are working in an investment advisory firm where your primary job is to support your clients in their investment decisions by guiding them according to their risk appetite. Mr. Kashif wants to invest 5 million while he doesn't have any idea how to make a portfolio that would be diversified enough to mitigate the risk. Though, you asked a few questions from Mr. Kashif to know his financial health and potential to bear losses.

1. Kashif is 42 years old and working in a privately owned company.

2. He has 3 children, ages of the children are 7,11, and 15, and the elder one is about to go to college which required annual fees of PKR 150,000.

3. He wants to earn at least a return that compensates for the inflationary pressure in the future. The current inflation rate of Pakistan is hovering around 8.90%.

4. According to him, he believed, he can able to take more risks.

5. He also planned for a leisure trip with his family after 3 years which required PkR 2 million.

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Note - Answer to this question requires qualitative analysis and this is based on my view about the portfolio and its allocation into various instruments.

Firstly let us understand the pros and cons of each item of the portfolio to be invested. The 3 portfolios consist of 4 instruments for investment -

1. Cash - Cash is not an investment rather it is holding money on hand or bank. There is negligible return in the cash. However, it provides the highest liquidity to meet urgent requirements of money.

2. Equity - Equity is the riskiest investment in the market with the highest return among all the other market instruments. Preferably Equity investment should be long-term (at least 3 to 10 years) to earn a handsome return from it. It is not advised to invest in equity for short terms like 1 year.

3. Money Market Funds - Investment in these funds provides good liquidity for the short term with limited returns and less risk. This instrument is safe for short term investment from 3 months to 1 year.

4. Gold - Gold is the safest asset with a steady return. The risk for gold is almost nil and every investor should hold 15-20% of investment in Gold form. One should not liquidate the same unless urgency.

Key Requirement of Mr. Kashif -

- Mr. Kashif want to invest 5 million (PkR 5,000,000)

- He needs annual liquidity for paying fees of his elder son PkR 150,000. - This requirement can be met by keeping 5% in cash.

- Also he needs PkR 2 million (PkR 2,000,000) after 3 years for a trip. - I would not recommend investing in Equity. Also, he is ready to take more risks.

Considering this he should invest in Portfolio C which has the following composition -

1. Cash = 5% - This will be sufficient to meet his cash requirements for fees. Any shortfall will be meet from money market funds.

2. Equity = 60% - Since he needs funds after 3 years which is a good time to invest in equity and earn a good return. Also, his risk appetite allows him to invest in Equity.

3. Money Market Funds = 15% - This will give less return with lesser risk to balance the portfolios. Also, any requirement of funds will be met by disposing of these funds

4. Gold = 20% - Since the equity portion is 60%, the gold portion should also be on the higher side. Also if equity does not give good returns, gold performs better during those periods to balance the portfolio and reduce the variation.

#531 You are working as a portfolio associate and your

You are working as a portfolio associate and your - Business Statistics

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You are working as a portfolio associate and your manager assigned task to find out which investment option is feasible for existing portfolio. All of the investment options are riskier than market however still manager wants to optimize its risk in given investment options.

Requirements:

1. Calculate Average of each of the investment option.

2. Calculate the Risk of each of the investment option.

3. Calculate the Co-efficient of Variation of each investment option.

4. Calculation of correlation each of the investment option

5. Calculate Beta of each of the investment option.

6. Give your conclusion or recommendation which investment option is best for you in comparison to least risky

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Note While calculating average of Data A and D there is some rounding off error after putting average formula, so put value manually.

6. In comparison best investment option is A.

All have different return and Risk so we decide on the basis of Cofficient of Variation . Lower the Coefficient of variation is better. In option A it is lower in comparison to B, C and D.

Coefficient of Variation denotes how much risk involved in scurity in earning income of 1 Rupee. It gives risk per unit of return.

If we compare all from market then market has lower COV.

#529 Write an article on Pakistan’s economic performance

Write an article on Pakistan’s economic performance - Business Statistics

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Q1)  

1. Write an article on Pakistan’s economic performance pre & post impact of Covid-19? (Minimum words 250)
2. Briefly explain the difference between Markowitz Modern Portfolio Theory & Single Index Model approaches? What is the basic difference between these two approaches?

Q2)  

You are working as a portfolio associate and your manager assigned the task to find out which investment option is feasible for the existing portfolio. All of the investment options are riskier than the market however still manager wants to optimize its risk in given investment options.

Requirements:

1. Calculate the Average of each of the investment options.
2. Calculate the Risk of each of the investment options.
3. Calculate the Coefficient of Variation of each investment option.
4. Calculation of correlation of each of the investment options.
5. Calculate the Beta of each of the investment options.
6. Give your conclusion or recommendation which investment option is best for you in comparison to the least risky.

Q3)  

You are working in an investment advisory firm where your primary job is to support your clients in their investment decisions by guiding them according to their risk appetite.

Mr. Kashif wants to invest 5 million while he doesn’t have any idea how to make a portfolio that would be diversified enough to mitigate the risk. Though, you asked a few questions from Mr. Kashif to know his financial health and potential to bear losses.

1. Kashif is 42 years old and working in a privately owned company.
2. He has 3 children, ages of the children are 7, 11, and 15, and the elder one is about to go to college which required annual fees of PCR 150,000.
3. He wants to earn at least a return that compensates for the inflationary pressure in the future. The current inflation rate of Pakistan is hovering around 8.90%.
4. According to him, he believed, he can able to take more risk.
5. He also planned for a leisure trip with his family after 3 years which required PCR 2 million.

Being an advisory you gathered all the relevant data to consult him in a better way.

Allocation	Portfolio A	Portfolio B	Portfolio C
Cash	5%	20%	5%
Equities	20%	25%	60%
Money Market Funds	60%	40%	15%
Gold	15%	15%	20%
Total	100%	100%	100%
Expected Return	15%	18%	22%
Volatility	17%	20%	25%

Requirements

Suggest which investment portfolio is feasible for Mr. Kashif in order to fulfill his objectives?

Q 4)                                                                                                                             5 Marks

Alpha Beta Investment Company gathered the data to recommend stocks that are undervalued in the market according to Capital Assets Price Model (CAPM).

Stock	Current Price	Dividend	Price after a year	Beta
A	50.00	2.50	55.00	2.50
B	42.00	1.20	47.00	1.40
C	20.00	0.50	22.00	0.80

Market consensus for Risk free rate = 7% and Risk premium = 6%

Requirements

1. Calculate the Expected Return & CAPM derived return.
2. Highlight the under & overvalued companies based on SML.

Q 5)                                                                                                                             5 Marks

The portfolio manager wants to optimize the riskiness of the two assets portfolio with the given statistics below:-

Assets	Return	Volatility	Weight
A	17.00%	15.00%	40.00%
B	21.00%	25.00%	60.00%

Correlation

-0.70

-0.35

0.25

0.50

0.70

Requirements

Calculate the two assets portfolio standard deviation at different correlation levels which are mentioned above and suggest at which correlation is best suited to your portfolio.

 

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Free Chegg Answer

Q 4)

Expected return = (Dividend + Closing price)/ Opening price - 1

Expected return for:

A = (2.5+55)/50 -1= 15%

B = (1.2+47)/42 -1= 14.76%

C = (0.5+22)/20 -1= 12.5%

CAPM return = Risk free rate + Beta (Expected market return - risk free rate)

or CAPM return = Risk free rate + Beta (risk premium)

CAPM return for:

A = 7% + 2.5 * 6% = 22%

B = 7% + 1.4 * 6% = 15.4%

C = 7% + 0.8 * 6% = 11.8%

SML is created in similar way, only that Beta = 1

SML = 7% + 1 * 6% = 13%

Under valued companies = A, B as their CAPM return is more than SML, if people buy more of these the market of share will increase, hence increasing the base price used to calculate return, so the return offered by stock will go down.

Using same logic, over valued company = C