A company is considering replacing an oid piece of machinery, which cost $598,900 and has $347,400 of accumulated depreciation to date, with a new machine that has purchase price of $483,300. The old machine could be sold for $63,300. The annual variable production costs associated with the old machine are estimated to be $155,400 per year for eight years. The annual variable production costs for the new machine are estimated to be $101,100 per year for eight years. a.1 Prepare a differential analysis dated September 13, to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine, If an amount is zero, enter " D7, For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Answers
Differential Analysis - September 13
Alternative 1: Continue with the old machine
Alternative 2: Replace the old machine with a new one
Costs associated with Alternative 1:
Cost of the old machine: $598,900
Accumulated depreciation: $347,400
Variable production costs per year for 8 years: $155,400
Costs associated with Alternative 2:
Purchase price of the new machine: $483,300
Variable production costs per year for 8 years: $101,100
Proceeds from selling the old machine: $63,300
To determine the better alternative, we need to compare the costs and benefits of each option.
For Alternative 1, the relevant costs are the variable production costs for 8 years, which amount to $1,243,200 ($155,400/year * 8 years). There are no relevant benefits since there is no cash inflow or savings associated with keeping the old machine.
For Alternative 2, the relevant costs include the purchase price of the new machine ($483,300) and the variable production costs for 8 years ($808,800). The relevant benefit is the proceeds from selling the old machine ($63,300).
By subtracting the costs from the benefits for each alternative, we can determine the net differential cash flow:
Alternative 1: -$1,243,200
Alternative 2: -$483,300 - $808,800 + $63,300 = -$1,228,800
Comparing the net differential cash flows, we find that Alternative 2 has a lower negative cash flow compared to Alternative 1. Therefore, based on this analysis, it would be more financially favorable to replace the old machine with the new one. The differential analysis compares the costs and benefits of two alternatives to make an informed decision. In this case, Alternative 1 is to continue using the old machine, while Alternative 2 is to replace it with a new machine. The analysis considers various factors, such as the cost of the old machine, accumulated depreciation, variable production costs, purchase price of the new machine, and proceeds from selling the old machine.
After calculating the relevant costs and benefits for each alternative, the net differential cash flows are compared. Alternative 2, which involves replacing the old machine, has a lower negative cash flow compared to Alternative 1. This indicates that Alternative 2 is more financially advantageous.
By conducting this differential analysis, the company can assess the financial implications of continuing with the old machine versus replacing it. The analysis helps in making an informed decision based on the projected costs and benefits over the next eight years.
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Related Questions
Which is a disadvantage of using computerised system
a) greater accuracy
b) greater speed
c) improved accessibility to key facts
d) system failure
Answers
Answer: d- system failure
Explanation:
Cuz all the other ones are pros but system failure will mess up all your things in the computer depending on how bad the failure was.
When the amount of interest receivable decreases during an accounting period:
a. Accrual-basis revenues exceed cash collections from borrowers.
b. Accrual-basis net income exceeds cash-basis net income.
c. Accrual-basis revenues are less than cash collections from borrowers.
d. Accrual-basis expenses are less than cash payments to borrowers.
Answers
The correct option is option c) Accrual-basis revenues are less than cash collections from borrowers.
(c) Accrual-basis revenues are less than cash collections from borrowers. This means that the cash collected from borrowers is greater than the interest revenue recognized on an accrual basis.
A decrease in interest receivable during an accounting period indicates that the company has recognized less interest revenue than the cash collected, resulting in lower accrual-basis net income. This situation can arise due to various reasons and does not impact cash flow.
When a company loans money to its customers, it earns interest on the outstanding balance of the loan. This interest earned is reported as interest revenue on the income statement.
However, when the amount of interest receivable decreases during an accounting period, it means that the company has received less interest than expected or that some of the interest expected to be received has been deferred to a future period.
This situation can arise due to various reasons, such as a change in interest rates, a change in the payment schedule of the borrower, or the borrower defaulting on the loan.
It is important to note that this situation does not affect cash flow, as the cash collected is not impacted by the recognition of interest revenue on an accrual basis. However, it does impact the net income reported on the income statement.
If interest receivable decreases, it indicates that the company is recognizing less revenue than it is collecting in cash. This leads to a lower accrual-basis net income, which is different from the cash-basis net income.
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Which statement is true about the total assets and the total liabilities?
O The total of the assets and the liabilities are the same.
O The total of the assets is greater than the total of the liabilities.
The total of the assets is less than the total of the liabilities.
O The total of the assets cannot be compared to the total of the liabilities.
Mark this and retum
Answers
Answer:
O The total of the assets is greater than the total of the liabilities.
Explanation:
Assets are valuables that a person or business owns. Liabilities are the debts that a business or individuals owe to others. As per the accounting equation formula, the total assets are equal to the total of liabilities and equity. It means that assets are financed by equity, which is the owners' contribution to the business and debts from third parties. Therefore, the total of assets should be greater than the components of liabilities.
Answer: B. The total of the assets is greater than the total of the liabilities.
Explanation:
Smolira Golf Corp. has 20,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2018 was $58. What is Tobin’s Q for Smolira Golf? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answers
Answer:
Note: Missing question is attached below
Market value of equity = Shares * Share price = 20,000 * $58 = $1,160,000
Total debt = Current liabilities + Long term debt = $83,416 + $145,000 = $228,416
Book value of assets = $627,868
Tobin's Q = MV of equity + Bv of debt / Bv of assets
Tobin's Q = $1,160,000 + $228,416 / $627,868
Tobin's Q = 2.21
the munsell color company is considering the purchase of a new batch polymer-bonding machine for producing its number one line of crayons. although the machine being considered will not produce any increase in sales revenues, it will result in the before-tax reduction of labour costs by $200,000 per year. the machine has a purchase price of $250,000, and it would cost an additional $10,000 to install the machine. in addition, to operate this machine, inventory must be increased by $15,000. the machine is categorized as 10-year property. after 2 years, it can be sold for $150,000. the tax rate is 34% and the cost of capital is 15%. what is the ebit at the end of year 1? round to the whole number.
Answers
The Munsell Color Company is considering purchasing a new batch polymer-bonding machine for its crayon production. The machine is expected to reduce labor costs by $200,000 per year before taxes, but it will not increase sales revenues.
The machine has a purchase price of $250,000, with an additional installation cost of $10,000. Operating the machine requires an inventory increase of $15,000. It is a 10-year property and can be sold for $150,000 after 2 years. The tax rate is 34%, and the cost of capital is 15%. The task is to determine the EBIT (Earnings Before Interest and Taxes) at the end of year 1, rounded to the nearest whole number.
To calculate the EBIT at the end of year 1, we need to consider the net cash flows associated with the machine. In the first year, the labor cost reduction is $200,000, which is a before-tax amount. To calculate the after-tax effect, we need to subtract the tax expense. Assuming a tax rate of 34%, the tax expense would be $68,000 (34% of $200,000). Therefore, the after-tax labor cost reduction is $132,000 ($200,000 - $68,000).
Since the machine purchase and installation costs are incurred upfront, they do not impact the EBIT at the end of year 1. The inventory increase of $15,000 is also not relevant for calculating the EBIT. Therefore, the EBIT at the end of year 1 is equal to the after-tax labor cost reduction of $132,000.
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nursing is a humanitarian service give reason
Answers
what is each resident's consumption function? assume each consumption function is linear, and let y denote a consumer's disposable income.
Answers
Each resident's consumption function in the very small economy, with y being disposable income, is:
Andre: c = 1000 + 0.70yBarbara: c = 2,500 + 0.60 yCasey: c = 2000 + 0.90 yDeclan: c = 5000 + 0.60 yElena: c = 4000 + 0.75yHow to find the consumption function ?To find the resident's consumption function, you need to find their Marginal Propensity to Consume by the formula:
= Change in consumption / Change in income
For Andre this is:
= 14, 000 / 20, 000
= 0. 70
The consumption function is then c = 1000 + 0.70y.
For Barbara this is:
= 10, 000 / 20, 000
= 0. 5
The consumption function is then c = 2,500 + 0.60 y.
For Casey:
= 18, 000 / 20, 000
= 0. 9
The consumption function is then c = 2000 + 0.90 y.
For Declan :
= 12, 000 / 20, 000
= 0. 6
The consumption function is then c = 5000 + 0.60 y.
For Elena :
= 15, 000 / 20, 000
= 0. 75
The consumption function is then c = 4000 + 0.75y.
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Explain the importance of investment for economic growth, referring to investment in physical capital, human capital and natural capital.
Answers
Investment in physical, human, and natural capital is essential for economic growth. By investing in these areas, businesses can increase productivity, reduce costs, and improve their competitiveness, leading to sustained economic growth and development.
Investment is crucial for economic growth as it creates new capital stock that allows businesses to expand and become more productive. Physical capital investment includes expenditures on equipment, buildings, and other assets that increase production capacity. By investing in physical capital, firms can increase their productivity, reduce their costs, and improve their competitiveness, ultimately leading to economic growth.
Investment in human capital is also essential as it refers to the skills, knowledge, and experience of individuals that contribute to economic growth. Education and training are important examples of human capital investment that can increase the productivity of workers, enabling them to earn higher wages and contribute more to the economy.
Natural capital investment is critical as it pertains to investments that preserve and enhance the environment. It includes investments in clean technologies and renewable energy, which can reduce pollution and promote sustainability. Such investments can improve the quality of life for citizens, boost economic activity, and generate long-term economic growth.
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What are the 5 key success factors?
Answers
Strategic focus, people, operations, marketing, and finances are the five key success factors. How do you identify success factors? Understanding a project's overarching goal and the steps necessary to attain it is the first step in discovering and recognising success factors.
What are the eight success guiding principles?
1: Concentrate on results
2: Make realistic plans,
3: Give people and behaviour the top priority
4 : Be honest
5: Manage range, Managing complexity and risk is a principle
7: Have informed clients.
8: Take experience into account.
These are the essential guidelines for success
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I need help bruh. Prereading activities include A. concept mapping B. discussion C. Questioning D. all of these
Answers
Explanation
Answer:
D
All of these
Explanation:
1. List the book title and retail price for all books with a retail price lower than the average retail price of all books sold by JustLee Books. 2. Determine which books cost less than the average
Answers
The SQL syntax which retrieves the book title and retail price for books lesser than the average price of all books by just Lee. The SQL command is written thus ;
SELECT title, retail
FROM books
WHERE retail <
(SELECT AVG(retail)
FROM books);
The first line lists the columns to be used to form the new table. books is the name of the table to be looked into (line 2)Line 3 is the condition, which is rows where retail price lesser than the average retail price. Line 4 uses the AVG command to obtain the average of the retail cost of all books.Hence, the SQL command will display all columns where retail price is below the average price of books with only the book title and retail price column included.
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What is one major difference between income tax and sales tax?
A. Income tax is based on taxable income, while sales tax is based
on gross income.
B. Income tax is regressive, while sales tax is progressive.
C. Income tax is based on gross income, while sales tax is based on
taxable income.
D. Income tax is progressive, while sales tax is regressive.
Answers
Answer:
D. Income tax is progressive, while sales tax is regressive.
Explanation:
In a progressive tax system, the percentage of tax imposed increases as the taxable income rises. For income tax, progressive tax means an individual with a low income will be taxed using a lower rate compared to high earners. Progressive tax categorizes incomes into different income brackets depending on the level of income. The tax rate increases as one move from a low-income bracket to a higher one.
A regressive tax system charges a constant rate for everyone. Sales tax is a good example of a regressive tax. The tax on basic items, low-priced items, is at the same rate as expensive or high-end items. It means that low-income earners are taxed the same rate as high-income earners for all items purchased.
Collection of projects, reports, exams, awards and other evidence of past experience and accomplishments which may serve as a summary of an individual’s interests and abilities and give a viewer an in-depth understanding of the individual’s personality and creativity
A. Career Portfolio
B. Mission Statement
C. Proprietary
D. Annotation
Answers
Answer:
A)Career Portfolio
Explanation:
Career portfolio can be regarded as digital display of one's professional experience as well as accomplishments. It is usually used in planning, organizing as well as documentation of Educational, skills and work sample. It can be used when applying for jobs and training programs. It gives in-depth information compare to than a resume. It should be noted that Career Portfolio is Collection of projects, reports, exams, awards and other evidence of past experience and accomplishments which may serve as a summary of an individual’s interests and abilities and give a viewer an in-depth understanding of the individual’s personality and creativity.
Suppose Wacken, Limited, just issued a dividend of $1.85 per share on its common stock. The company paid dividends of $1.50, $1.59, $1.66, and $1.77 per share in the last four years.
a. If the stock currently sells for $45, what is your best estimate of the company's cost of equity capital using the arithmetic average growth rate in dividends? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. What if you use the geometric average growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
a. Cost of equity____%
b. Cost of equity____%
Answers
The Cost of equity using the arithmetic average growth rate in dividends is 9.16% and using the geometric average growth rate in dividends is 8.84%
.a. Cost of equity using the arithmetic average growth rate in dividends:Given dividend payout:$1.50, $1.59, $1.66, $1.77, $1.85Given Selling price of stock, P=$45We need to estimate the cost of equity. It can be found using the Gordon Growth Model formula:g = (D1 / P) + g, whereg = the company's annual dividend growth rate,D1 = the expected dividend in one year from now,P = the current stock priceWe can estimate the growth rate using the arithmetic average growth rate formula:
Arithmetic average growth rate = [($1.85/$1.50)^(1/4)] - 1Arithmetic average growth rate ≈ 5.58%Expected dividend in one year = $1.85 (Given in question)Cost of equity capital = [($1.85 / $45) + 5.58%] x 100%Cost of equity ≈ 9.16%b. Cost of equity using the geometric average growth rate in dividends:Geometric average growth rate = [(1.50 x 1.59 x 1.66 x 1.77 x 1.85)^(1/5)] - 1Geometric average growth rate ≈ 5.44%Cost of equity capital = [($1.85 / $45) + 5.44%] x 100%Cost of equity ≈ 8.84%
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ASAPP PLZZZZ
3. In the mythical kingdom of Erehwon, the basic unit of money is the rudolf. At today's exchange rate, 4 rudolfs are equal to $1. A U.S. tourist in Erehwon wishes to purchase a guidebook to the country. The price is 6 rudolfs. How much is this in U.S. money?
(A) $1.50
(B) $6
(C) $4
(D) $24
Answers
rate this photo...............
Answers
Answer:
ok
Explanation:
black and white
Answer:
um id.k maybe a 5 1/2 ig?
Explanation:
Which phrase best describes a certificate of deposit?
Answers
Answer:
An account in which money must stay deposited for a certain amount of time.
When a US Airways flight crashed into the Hudson River, all members of the fight crew knew exactly what to do, without waiting for orders. As a result of their actions, a disaster was averted, and all
passengers were rescued. This is an example of:
A) transformational leadership
B) a leadership substitute
C) a leadership neutralizer
D) coercive power
E) virtual leadership
Answers
As a result of their actions, a disaster was averted, and all passengers were rescued. This is an example of a leadership substitute.
leaderships substitutes are variable that make leadership unnecessary for subordinates and reduce the extent to which subordinates rely on their leader.
It clarify role expectations, motivate organizational members or satisfy members. In some cases, these substitutes supplement the behavior of a leader.
A leadership substitutes is something that acts in place of the influence of a leader and makes leadership unnecessary.
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Jeremy is working on a spreadsheet. Which part of the information processing cycle will justify Jeremy's use of the spreadsheet and give the final output?
A. processing
B. input
C. output
D. storage
E. data entry
Answers
Answer:
A
Explanation:
if its wrong than forsure d
Answer:
its b
Explanation:
im taking the test on plato
Below you will find the closing stock prices for eBay over a three-week period. Calculate the simple three-day and five-day moving averages for the stock. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)Date Close4/23/2012 $ 37.834/24/2012 37.654/25/2012 37.254/26/2012 37.514/27/2012 36.774/30/2012 36.945/1/2012 37.015/2/2012 37.055/3/2012 37.745/4/2012 37.845/7/2012 37.775/8/2012 37.935/9/2012 38.265/10/2012 38.415/11/2012 38.243-day 5-day4/23/2012 4/24/2012 4/25/2012 $ 4/26/2012 4/27/2012 $4/30/2012 5/1/2012 5/2/2012 5/3/2012 5/4/2012 5/7/2012 5/8/2012 5/9/2012 5/10/2012 5/11/2012
Answers
To calculate the simple three-day and five-day moving averages for eBay's stock prices, we add up the closing prices for the number of days in the moving average and divide by the number of days.
The simple three-day moving averages are:
April 25th: ($37.83 + $37.65 + $37.25) / 3 = $37.58
April 26th: ($37.65 + $37.25 + $37.51) / 3 = $37.47
April 27th: ($37.25 + $37.51 + $36.77) / 3 = $37.18
April 30th: ($37.51 + $36.77 + $36.94) / 3 = $37.07
May 1st: ($36.77 + $36.94 + $37.01) / 3 = $36.91
May 2nd: ($36.94 + $37.01 + $37.05) / 3 = $37.00
May 3rd: ($37.01 + $37.05 + $37.74) / 3 = $37.27
May 4th: ($37.05 + $37.74 + $37.84) / 3 = $37.54
May 7th: ($37.74 + $37.84 + $37.77) / 3 = $37.78
May 8th: ($37.84 + $37.77 + $37.93) / 3 = $37.85
May 9th: ($37.77 + $37.93 + $38.26) / 3 = $37.98
May 10th: ($37.93 + $38.26 + $38.41) / 3 = $38.20
May 11th: ($38.26 + $38.41 + $38.24) / 3 = $38.30
The simple five-day moving averages are:April 27th: ($37.83 + $37.65 + $37.25 + $37.51 + $36.77) / 5 = $37.20
April 30th: ($37.65 + $37.25 + $37.51 + $36.77 + $36.94) / 5 = $37.14
May 1st: ($37.25 + $37.51 + $36.77 + $36.94 + $37.01) / 5 = $37.10
May 2nd: ($37.51 + $36.77 + $36.94 + $37.01 + $37.05) / 5 = $37.06
May 3rd: ($36.77 + $36.94 + $37.01 + $37.05 + $37.74) / 5 = $37.10
May 4th: ($36.94 + $37.01 + $37.05 + $37.74 + $37.84) / 5 = $37.32
May 7th: ($37.01 + $37.05 + $37.74 + $37.84 + $37.77) / 5 = $37.48
May 8th: ($37.05 + $37.74 + $37.84 + $37.77 + $37.93) / 5 = $37.87
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why is it important to protect profit motive in a mixed economy
Answers
Answer:
A company's profit motive benefits consumers by ensuring the products and services they need are available at a high quality.
Explanation:
I looked it up, cause I don't know much about this stuff, but I hope it helps you!
Creating an anonymous complaint or grievance process is something
employers can implement to prevent which of the following?
O A. Layoffs
B. Harassment
C. Taxed income
D. Arguments
Answers
hope I could help goodluck
Suppose that when the price of peanut butter falls from $5 to $4 per jar, the quantity of jelly purchased rises from 10 million jars to 15 million jars.
Answers
The cross-price elasticity of demand is -1.82
Calculate the cross-price elasticity of demand:
The formula to calculate the cross-price elasticity of demand is:
(92 -91)/[(02 + 91)/2]
Cross price elasticity
(P2- A)/[(P +P)/ 2]
(15-10)/ [(15+10)/2]
(4-5)/ (4+5)/2]
5/12.5
-1/4.5
0.4
-0.22
=-1.82
Therefore, the cross-price elasticity of demand is -1.82. Since the demand is negative
The goods are said to be Complements.
Your question is incomplete. Please read below to find the missing content.
Suppose that when the price of peanut butter falls from $5 to $4 per jar, the quantity of jelly purchased rises from 10 million jars to 15 million jars. Instructions: Round your answer to two decimal places and include a negative sign if appropriate. The cross-price elasticity of demand between peanut butter and jelly using the midpoint method is The goods are?
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A United States firm recently won a large contract with a company in Malaysia, by providing the foreign nation's government officials with American cars and a promise of additional monetary gifts. Clearly, this procedure: Group of answer choices violates the Foreign Corrupt Practices Act. defines the common business practices of the foreign nation and should be respected. defines the terms of the business contract, and as long as both parties sign, the agreement is binding. violates the Fair and Balanced Competitive Practices Act.
Answers
Answer:
violates the Foreign Corrupt Practices Act.
Explanation:
A contract can be defined as an agreement between two or more parties (group of people) which gives rise to a mutual legal obligation or enforceable by law.
There are different types of contract in business and these includes: fixed-price contract, cost-plus contract, bilateral contract, implies contract, unilateral contract, adhesion contract, unconscionable contract, option contract, express contract, etc.
The Foreign Corrupt Practices Act (FCPA) is a federal law of the United States of America that explicitly prohibits its citizens and business firms from engaging in bribery of foreign of foreign government officials in order to gain favors or profit their business. This Act was enacted by the 95th US Congress and signed into law by President Jimmy Carter on the 19th of December, 1977.
In this scenario, a United States firm recently won a large contract to provide Malayalam government officials with American cars and a promise of additional monetary gifts. Hence, this procedure clearly violates the Foreign Corrupt Practices Act of 1977.
what policy actions should the fed take, acting from a keynesian viewpoint, to move up the phillips curve in a recessionary economy and decrease unemployment? responses a tax cut a tax cut an open market sale of treasury securities an open market sale of treasury securities an open market purchase of treasury securities an open market purchase of treasury securities
Answers
The tax cuts and an open market purchase of treasury securities are such policy actions should the fed take, acting from a Keynesian viewpoint, to move up the Phillips curve in a recessionary economy and decrease unemployment. The correct options are A and C.
Implementing a tax cut can boost the economy as well. Tax cutting increases the likelihood that people and corporations will invest and spend more money. Spending more money can enhance employment and production by increasing the overall demand. By buying Treasury securities on the open market, the Fed can carry out open market operations. As a result, the economy receives an increase in liquidity and the money supply.
Thus, the ideal selections are options A and C.
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When is it most beneficial and appropriate for a retailer to use a distribution center?.
Answers
The retailer can carry less inventory in each store thanks to distribution centres. Retailers' systemwide inventory investments are lowered as a result.
A distribution center is what?A warehouse or other specialised building that is stocked with goods to be redistributed to retailers, wholesalers, or directly to consumers is referred to as a distribution centre for a set of products. Distribution centres frequently have refrigeration or air conditioning. The order processing component of the entire order fulfilment process is handled by a distribution centre, which is a key component. The typical perception of distribution centres is that they are demand-driven. A warehouse, a distribution centre, a fulfilment centre, a cross-dock facility, a bulk break centre, and a package handling centre are additional names for this type of facility.
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This is for my NJROTC class! Pls help!
Answers
Answer: Option 1
Explanation:
Answer:
option1
Explanation:
One explanation for the length of the Great Recession is that there was a leftward shift in the long-run aggregate supply curve, caused by: Choose one: A. decreased consumer confidence. B. decay of key infrastructure. C. new financial regulations. D. instability in the housing market. E. sticky prices.
Answers
The correct option that explains the length of the Great Recession due to the leftward shift in the long-run aggregate supply curve is option D, instability in the housing market.
This is because the Great Recession was primarily caused by the bursting of the housing bubble, which led to a significant decline in the housing prices, and triggered a chain reaction of events that impacted the entire economy. As a result of the housing market instability, consumers became more cautious in their spending, businesses reduced their investments, and the overall demand for goods and services decreased, which caused a leftward shift in the long-run aggregate supply curve.
The decreased demand resulted in lower output levels, higher unemployment rates, and reduced economic growth. The other options, such as decreased consumer confidence, decay of key infrastructure, new financial regulations, and sticky prices, may have contributed to some extent, but they were not the primary cause of the Great Recession.
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The current price of a stock is $84.50; a 2-month American-style call on the stock has an exercise price of $90 and a market price of $3.55. A 2-month American-style put on this stock has an exercise price of $75 and a market price of $1.65. The stock pays no dividends. (The profits in the below problem are from the perspective of time-zero when you add the option position, to time T when the option expires.) -Assume that you own 800 shares of this stock, and that you decide to construct a "covered call" position from your stock and this call. Assuming that you hold the position to option expiration, what is the: What option transaction should you make (in words)? Maximum potential profit in dollars? Largest potential loss in dollars? Breakeven terminal stock price? Terminal stock price where the profit from the covered call position is the same as the profit from a "long stock only" position? Explain a given "scenario" or "economic situation" (in terms of a market forecast and your portfolio), where it would make sense to set up a "covered call" position: Graph the profit profile of this Covered Call position, as a function of the terminal stock price, assuming that you hold the position until expiration. Make sure and show the initial stock price and strike price on the x-axis.
Answers
To construct a "covered call" position, you would sell the 2-month American-style call option on the stock with an exercise price of $90. This means you retain ownership of your 800 shares of stock while simultaneously selling the right for someone else to buy the stock at $90 per share.
The maximum potential profit in dollars is the sum of the premium received from selling the call option and any profit from the stock's price appreciation if it remains below the exercise price. In this case, the maximum potential profit would be $3.55 (the market price of the call option) multiplied by 800 shares, which is $2,840.
The largest potential loss in dollars would occur if the stock price falls to zero. In this scenario, the loss would be the total value of the 800 shares, which is $84.50 per share multiplied by 800, equaling $67,600.
The breakeven terminal stock price can be calculated by subtracting the premium received from selling the call option from the current stock price. In this case, the breakeven stock price would be $84.50 - $3.55 = $80.95 per share.
The terminal stock price where the profit from the covered call position is the same as the profit from a "long stock only" position would be the exercise price of the call option ($90). At this price, the profit from the covered call position would be limited to the premium received from selling the call option, while the profit from the "long stock only" position would be the stock's price appreciation.
Setting up a "covered call" position can be advantageous in a scenario where you have a neutral or slightly bearish market forecast. By selling the call option, you receive the premium upfront, providing additional income. If the stock price remains below the exercise price, you keep the premium and still benefit from any potential dividend payments. However, if the stock price increases significantly, your potential profit will be limited to the exercise price plus the premium received. It is a strategy that can generate income while still maintaining stock ownership, but it limits the potential upside.
The profit profile of the covered call position would have a flat line representing the maximum potential profit until the breakeven terminal stock price ($80.95). After that point, the profit line would start to slope downward, showing that the maximum potential profit is capped. The x-axis would show the terminal stock price, with the initial stock price ($84.50) and the exercise price ($90) marked.
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How do professional organizations and associations promote career preparation and offer opportunities? Write a one- or two-paragraph response based on the reading. Include supporting evidence in the form of reasons, facts, or details
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Professional organizations and associations are collegiate structures in which the members of a certain profession come together, with the aim of contributing to the better development of professional practice.
What is profession?A successfully professionalized field of employment is referred to as a profession.
It can be characterized as a disciplined team of people, professionals, who uphold ethical standards, present themselves as, and are recognized by the public as possessing, special knowledge and skills in a widely acknowledged body of learning derived from research, education, and training at a high level, and who are ready to apply this knowledge and exercise these skills in the interest of others.
Professional careers are built on specialized education, and their main goal is to provide people with impartial, objective advice and assistance in exchange for a clear, direct payment that is entirely unrelated to any expectation of future financial benefit.
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Professional organizations and associations promote career preparation and offer opportunities in a variety of ways. One of the most important ways is by providing access to educational resources and training opportunities. Many professional organizations and associations offer workshops, seminars, and online courses that help members develop new skills and stay up-to-date on the latest trends and best practices in their field. For example, the American Marketing Association offers a wide range of professional development programs, including online courses, workshops, and certifications, designed to help members improve their marketing skills and advance their careers.
In addition to educational opportunities, professional organizations and associations also provide a variety of networking opportunities that can help members connect with other professionals in their field. This can be especially valuable for individuals who are just starting out in their careers or who are looking to transition to a new role or organization. For example, the Association for Computing Machinery hosts conferences and networking events that bring together computer science professionals from around the world, providing opportunities for members to meet potential employers, collaborators, and mentors.