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[The following information applies to the questions displayed below.] |
| Data for Hermann Corporation are shown below: |
| Per Unit | Percent of Sales |
|||
| Selling price | $ | 80 | 100% | |
| Variable expenses | 44 | 55% | ||
| Contribution margin | $ | 36 | 45% | |
| Fixed expenses are $76,000 per month and the company is selling 2,500 units per month. |
2.
value:
1.25 points
Required information
| Required: | |
|
1-a. |
The marketing manager argues that a $8,100 increase in the monthly advertising budget would increase monthly sales by $15,500. Calculate the increase or decrease in net operating income. |
| 1-b. | Should the advertising budget be increased? | ||||
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In: Accounting
4a. Suppose the general demand function for cars is Qd = f(P, M, Pgas, Pe, N) such that M = average income of $30,000; Pgas = $2.75 per gallon of gas; Pe = $20,000 expected future price; and N = 700 consumers in the market. Suppose the general supply function is Qs = f(P, P1, Pr, T, Pe, F) such that P1 of average wages is $15.15, Pr = $35,000 the average cost of SUV's, T = 100 the average level of technology and F = 21 is the average number of firms in the industry. Explain the meaning of the general demand function, the general supply function, and the next steps in solving this problem.
In: Economics
Information on four bonds is presented in the table. Each bond has a face value of $100. Each bond that pays a coupon pays it annually.
| BOND | MATURITY (YEARS) | COUPON RATE | YTM |
| A | 1 | 0% | 5% |
| B | 5 | 6% | 7% |
| C | 10 | 10% | 9% |
| D | 20 | 0% | 8% |
a) Compute the percentage change in the price of each bond assuming its yield to maturity (YTM) increases by 1%, for example, from 5% to 6%.
b) If you think that bond yields generally will decrease in the next 3 months, which bond would you prefer to own now? Briefly explain.
In: Finance
An investor buys a bond with the following characteristics:
The yield to maturity at the time of purchase is 8.50%. The investor sells the bond immediately after the sixth coupon payment, when the yield to maturity rises to 9.50%.
In: Finance
In: Economics
In: Finance
Pfizer paid its stockholders a dividend of $5 per share yesterday. Today, the company announced that they plan to increase that dividend by $1.00 per share for each of the next three years. After that, they plan to keep their dividend at $8 per share forever. The variance of Pfizer’s stock is .09, the variance of the market is .04, and the correlation between Pfizer’s stock and the market is .05. The risk-free rate is 3% and the market-risk premium is 5.7%. Pfizer has $100 million shares of stock outstanding and $50 million of debt. The YTM for its is 8%. Use the dividend discount model to find the price per share of Pfizer’s stock.
In: Finance
(a) If your utility is represented by u(x; y) = min(x+2y;
2x+y);what
do your indi¤erence curves look like?
(b) Given your answer in (a), obtain the MRS (marginal rates of
sub-
stitution).
(c) Suppose the prices of x and y are px = $3 and px = $1 and
you
have 100 dollars. What would you choose?
(d) If px decreases to $1; what would you choose?
(e) Use the Slutsky decomposition to decompose the total price
e¤ect
into the substitution e¤ect and income e¤ect when px
decreases
from $3 to $1:
In: Economics
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The firm Prussian Clausewitz produces three products: Blücher, Napoleon, and Wellington. These three products are sold at a sales mix of 1:3:2, respectively.
The firm has $6,000,000 in fixed costs. How many Napoleon units must the firm sell at breakeven (round up to nearest unit if necessary)? |
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In: Accounting
(a) If your utility is represented by u(x; y) = min(x+2y; 2x+y);what do your indi¤erence curves look like?
(b) Given your answer in (a), obtain the MRS (marginal rates of sub- stitution).
(c) Suppose the prices of x and y are px = $3 and px = $1 and you have 100 dollars. What would you choose?
(d) If px decreases to $1; what would you choose? (e) Use the Slutsky decomposition to decompose the total price e¤ect into the substitution e¤ect and income e¤ect when px decreases from $3 to $1:
In: Economics