2. (i) First describe in general, a tariff and an import quota.
(ii) What are the primary differences between them?
(iii) Using a diagram for each, show how an increase in demand would affect such macroeconomic variables as (a) the price, (b) imports, (c) domestic production and (d) government revenue, much as we did in class. Be sure to show these effects on your two graphs.

Moody Farms just paid a dividend of $2.65 on its stock. The growth rate in dividends is expected to be a constant 3.8% per year indefinitely. Investors require a return of 15% for the first 3 years, a return of 13% for the next 3 years, and a return of 11% thereafter. What is the current share price? Please work step by step in Excel, thanks so much!

This is for Python programming, and I am trying to use 2 for loops to ask a slaesperson how many of 5 different items they sold, then the program is to calculate the total dollar amount sold. Formatting and all that aside, I am having an issue with the loops not stepping through the 2 lists at the same time. The first loop is taking all 5 entered quantities times the price of the first item, and then all 5 quantities times the price of the 2nd item, etc. I need to get Item1 * Quant1, Item2 * Quant2, etc.

Item1 = 2.5
Item2 = 1.98
Item3 = 5.75
Item4 = 3.45
Item5 = 4.0
  
Quant1 = int(input("Enter the quantity of Item1 sold: "))
Quant2 = int(input("Enter the quantity of Item2 sold: "))
Quant3 = int(input("Enter the quantity of Item3 sold: "))
Quant4 = int(input("Enter the quantity of Item4 sold: "))
Quant5 = int(input("Enter the quantity of Item5 sold: "))
for Item in [Item1, Item2, Item3, Item4, Item5]:
for Quant in [Quant1, Quant2, Quant3, Quant4, Quant5]:
Cost = float(Quant * Item)
print (Cost)

Exercise 7-7 First-Stage Allocations [LO7-2]

The operations vice president of Security Home Bank has been interested in investigating the efficiency of the bank’s operations. She has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costs at the bank’s various branches. If the branches with the most efficient operations can be identified, their methods can be studied and then replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far to show how those costs are related to the various services provided by the bank. The operations vice president has asked your help in conducting an activity-based costing study of bank operations. In particular, she would like to know the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions.

The Westfield branch of Security Home Bank has submitted the following cost data for last year:

Virtually all other costs of the branch—rent, depreciation, utilities, and so on—are organization-sustaining costs that cannot be meaningfully assigned to individual customer transactions such as depositing checks.

In addition to the cost data above, the employees of the Westfield branch have been interviewed concerning how their time was distributed last year across the activities included in the activity-based costing study. The results of those interviews appear below:

Required:

Prepare the first-stage allocation for the activity-based costing study

The firm Monster is planning to acquire Angel, another firm in the same industry. Relevant financial information for the two firms is shown below.

Monster: Price per share 4.50 . Number of shares 28,000,000 Dividend payout ratio 0.65

Angel: Price per share 1.90. Number of shares 10,500,000. Dividend payout ratio 0.20

Both firms are financed entirely by equity. The acquisition will result in expected cost savings for the merged (post-acquisition) firm with a total present value of $38 million.

(a) Assume for this part of the question that Monster’s shares are valued at $4.50 each. How many new shares would Monster issue to Angel's shareholders in exchange for the whole 10.5 million of Angel's shares? What is the total value and price per share of the merged firm? Should Monster pay for the acquisition on this basis? Explain briefly.

Assume now that Monster's shareholders will agree to the acquisition for a premium of $4.05 million

(b) What is the minimum number of shares Monster should offer, such that Angel's shareholders will participate in the acquisition?

(c) Assume Monster decides to acquire Angel by issuing the minimum number of shares as in part (b). In the first year the total earnings of the merged firm will be $15.87 million. Monster's dividend payout ratio will be maintained in the merged firm. What change in dividend payment will a former Angel shareholder get in the first year of the merged firm, if they had 1000 shares in Angel before the acquisition?

Consider a student who purchases education (x) and other goods (y). The student has preferences over these goods given by u(x, y) = ln(x) + 3ln(y). The prices of education and other goods are, respectively, px = 10 and py = 5, and the student’s income is I = 20.

1. Using the first-order conditions you derived, find the student’s optimal consumption of education x ∗ and other goods y ∗ and derive an algebraic expression for the student’s income expansion path.

2. Graph the budget constraint, IEP, optimal bundle (x ∗ , y∗ ), and the indifference curve passing through the optimal consumption bundle. Label all curves, axes, slopes, and intercepts. Put education on the x-axis.

3. Suppose now that the student receives a voucher for 1 free unit of education from the government. In other words, the price of her first unit of education is zero, and the price of any additional units is the original price px = 10. The student cannot sell the voucher. Both I and py are unchanged. Draw the new budget constraint under the voucher program. Be sure to label any important point(s) on the constraint and label the slope(s) of the constraint. Put education on the x-axis. And find the optimal consumption of x and y for the student when she receives the voucher.

*Excel formulas needed* A U.S.-based firm is considering a six- year project in Colombia. The following information is available about the project: Initial investment. The initial investment of USD 750,000 is used to purchase capital equipment. This equipment will be depreciated straight line to zero. At the end of six years, the remaining equipment will be sold for Colombian Peso (COP) 25,000,000. Working capital. The investment in working capital is COP 100,000,000. There are no changes in working capital until the end of the project when the full amount is recovered. Units, price, and costs. The firm will produce 2000 units of a product annually. The selling price is expected to be COP 599000 in the first year. This price is expected to increase at a rate of 4 percent annually. The direct expense per unit is expected to be COP 200000 in the first year. This is expected to increase at a rate of 5 percent annually. Indirect expenses are expected to be COP 50,000,000 annually. Taxes and miscellaneous. Colombian taxes on income and capital gains are 34 percent. There are no additional withholding taxes. All cash flows are repatriated when generated, and there are no additional U.S. taxes. The parity conditions are assumed to hold between Colombia and the United States. The relevant inflation indexes indicate a rate of 3 percent for the United States and 6 percent for Colombia. Spot USDCOP equals 3300. Brady’s USD denominated WACC is 12 percent.

a. Calculate COP cash flows

EXCEL FORMULAS only please. It will be incorrect if not run through Excel.

Thanks in advanced!

1. Iowa Soy Products (ISP) buys soy beans and processes them into other soy products. Each ton of soy beans can be converted for an additional $200 into 500 pounds of soy meal and 100 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1 and soy oil can be sold in bulk for $4 per gallon. ISP can process the 500 pounds of soy meal into 600 pounds of soy cookies at an additional cost of $300. Each pound of soy cookies can be sold for $2 per pound. The 100 gallons of soy oil can be packaged at a cost of $200 and made into 400 quarts of Soyola. Each quart of Soyola can be sold for $25.

1. Allocate the joint cost to the cookies and the Soyola using the following:

a. Sales value at splitoff method (Soy Meal & Soy Oil)

b. NRV method (Cookies & Soyola)

2. Should ISP have processed each of the products further?

Part A

Pearson Ltd is financed through the following sources:

•  Ordinary share: 100 million shares outstanding, with current market price of

  one share at $2.2

•  Bank loan: $100 million borrowed from ANZ bank with an interest rate of 6%

•  Corporate bond: Pearson’s corporate bond is currently trading at 80% of its

  face value. The bonds pay coupons once per annum and have a total book value of $100 million. The current yield to maturity on the bond is 8% per annum.

  The risk-free rate is 3% and the market risk premium is 6%. It is estimated that Pearson has an equity beta of 1.5. Assume corporate tax rate is 30%, calculate the WACC for Pearson Ltd.

  Part B

  According to M&M proposition II, cost of equity increases with leverage. Cost of debt will also increase with leverage given higher probability of default. As both cost of equity and cost of debt are increasing when leverage increases, does it mean that leverage is bad for the firm value?

  Part C

  It can be observed that the average gearing ratio for the Pharmaceuticals industry is much lower than industries such as Utilities and Transportation. Explain why this is the case.