Portfolio beta = 1.683 and Portfolio expected return = 21.575%.
To calculate Steve's portfolio beta, we need to multiply the beta of Airbus (1.98) by the proportion of funds invested in Airbus (85%).
This gives us (1.98 * 0.85) = 1.683.
To calculate the portfolio expected return, we need to multiply the expected return of Airbus (24.50%) by the proportion of funds invested in Airbus (85%), and add it to the expected return of Treasury bills (5%) multiplied by the proportion of funds invested in Treasury bills (15%).
This gives us ((24.50% * 0.85) + (5% * 0.15)) = 21.575%.
Therefore, Portfolio beta = 1.683 and Portfolio expected return = 21.575%.
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Explain the two different concepts of purchasing power parity
PPP and how they relate to the Law of one price.
explain the balassa-samuelson Effect and its implications for
PPP
The two different concepts of Purchasing Power Parity (PPP) are absolute PPP and relative PPP.
Absolute PPP states that the exchange rate between two currencies should equal the ratio of the price levels of a basket of goods in each country. Relative PPP, also known as the Law of one price, suggests that the price of a particular good should be the same across different countries when expressed in a common currency.
The Balassa-Samuelson Effect is a theory that explains the relationship between PPP and the differences in productivity levels between countries. It suggests that countries with higher productivity levels will have higher price levels and thus a higher exchange rate.
Purchasing Power Parity (PPP) consists of two different concepts: absolute PPP and relative PPP. Absolute PPP proposes that the exchange rate between two currencies should reflect the ratio of the price levels of a basket of goods in each country. This means that if the price of a particular basket of goods is higher in one country compared to another, the exchange rate should adjust accordingly to maintain purchasing power parity.
On the other hand, relative PPP, also known as the Law of one price, suggests that the price of a specific good should be the same across different countries when expressed in a common currency. In other words, if a good has the same quality and characteristics, it should have the same price in different countries after accounting for exchange rates.
The Balassa-Samuelson Effect is a theory that explains the relationship between PPP and productivity differences between countries. According to this effect, countries with higher productivity levels in their tradable sectors (sectors involved in international trade) will experience higher price levels. This is because higher productivity allows firms to pay higher wages to their workers, increasing the overall cost of production. As a result, these countries will have higher price levels for goods and services in their domestic markets compared to countries with lower productivity levels. This price differential leads to a higher exchange rate to maintain PPP.
The implications of the Balassa-Samuelson Effect for PPP are that the relative productivity levels between countries can influence exchange rates. If a country experiences productivity growth in its tradable sector, it will lead to an appreciation of its currency. This appreciation occurs because higher productivity results in higher wages and prices, which in turn raises the exchange rate to maintain PPP. Conversely, countries with lower productivity levels in their tradable sectors will have lower price levels and a depreciated currency. The Balassa-Samuelson Effect highlights the importance of considering productivity differences when analyzing exchange rates and the validity of PPP.
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Business Case: Go Bike Go bike is a sharing bike platform with several identified by their longitude, latitude, and a unique 6-digit ID (format: A1A1A). bike parking stations • There are different departments that are responsible for (e.g., maintenance, finance, and operation), and one or more employees are working in each department. An employee must be assigned to only one department. • are to be described by data such as • There are two types of users ( ) request a bike. Registered users Bicycles number, purchase price, purchase date, and insurance details. make, year of production, uses (purpose), size, registry unregistered, and registered users should provide personal and payment information. • There are also two types of : can take a bike for free, limited to 30 minutes, and for more than 30 minutes, they should pay an extra fee of 1$ per hour. For OTPs, initially, they should pay 100$ as a deposit and their hourly rate begins from the moment of usage which is 1$ per hour. After returning the bike, the usage amount will be calculated and deducted from the 100$ deposit, and the rest of the deposit will be returned to them. • No customer can use a bike for more than 100 hours. • For each usage, the office keeps track of the date of request, the date the bike is returned, bike, customer and the rental total charged amount. • Personal details (such as name, address, telephone number) about each customer are kept in the database. HINT: Many-to-many relationships must be split into two one-to-many relationships.
The business case of Go Bike is a sharing bike platform that has several bike parking stations.
Each of the bikes is identified by their unique 6-digit ID in the format: A1A1A. The bike parking stations are described by data such as their longitude and latitude.
There are different departments that are responsible for various tasks, such as maintenance, finance, and operation. At least one employee works in each department, and each employee is assigned to only one department.
There are two types of users: registered and unregistered. Registered users should provide personal and payment information.
They can request a bike at any time, and the bike's purchase date, purchase price, insurance details, and number are recorded.
On the other hand, unregistered users can take a bike for free, but they are limited to 30 minutes. If they use the bike for more than 30 minutes, they must pay an extra fee of 1$ per hour.There are two types of OTPs: registered and unregistered. Initially, they should pay a deposit of 100$. Their hourly rate begins from the moment of usage, which is 1$ per hour. When the bike is returned, the usage amount will be calculated and deducted from the 100$ deposit. The rest of the deposit will be returned to them.No customer can use a bike for more than 100 hours. The office keeps track of the date of request, the date the bike is returned, bike, customer, and the rental total charged amount. Personal details about each customer, such as name, address, and telephone number, are kept in the database. Many-to-many relationships must be split into two one-to-many relationships.
Suppose you observe the following zero-coupon bond prices per $1 of maturity payment: 0.94038 (1-year), 0.88017 (2-year), 0.81333 (3-year). Compute r0(2,3), the 1-year implied forward rate for year 3. a. 8.68% b. 6.69% c. 8.22% d. 15.62% e. 7.11%
Implied forward rate implies the estimated rate that is calculated from the present yield curve and used to produce an expected future interest rate.
The formula to calculate the 1-year implied forward rate for year 3 (r0(2,3)) is as follows:r0(2,3) = ((P_2/P_3)^(1/n) - 1) × n where P_2, P_3 are the bond prices of the 2-year and 3-year zero-coupon bonds, respectively, and n is the number of years between these maturities.
Substituting the values of the bond prices gives:r0(2,3) = ((0.88017/0.81333)^(1/1) - 1) × 1r0(2,3) = (1.0822 - 1) × 1r0(2,3) = 0.0822 = 8.22%
Therefore, the 1-year implied forward rate for year 3 is c. 8.22%.
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If an event planning company receives $80 per person for registration fee, but the variable costs for one person is $30 food, $20 beverage, and $ 10 registration materials. And the total fixed costs are $3,000. How many attendees do you need in order to be break-event events?
The event planning company needs 150 attendees to break even in terms of costs.
To calculate the number of attendees needed to break even, we need to consider the fixed costs and the contribution margin per attendee.
Fixed Costs = $3,000
Contribution Margin per Attendee = Registration Fee per Attendee - Variable Costs per Attendee
Contribution Margin is a financial metric that represents the amount of revenue left over after subtracting the variable costs directly associated with producing goods or delivering services.
Contribution Margin per Attendee = ($80 - $30 - $20 - $10) = $20
Break-even Point (in terms of attendees) = Fixed Costs / Contribution Margin per Attendee
Break-even Point = $3,000 / $20 = 150 attendees
Therefore, the event planning company needs 150 attendees in order to break even.
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Dolls are the flow unit in a process with two sequential resources. The capacities of the resources are 1.5 and 0.99 dolls per minute. Demand occurs at the rate 1.1 dolls per minute. Instruction: Round your answer to one decimal place. What is the utilization (\%) of the first resource?
To calculate the utilization of the first resource, we need to determine the ratio of the flow rate through the first resource to its capacity. The flow rate through the first resource is equal to the demand rate, which is 1.1 dolls per minute.
Utilization (%) = (Flow rate / Capacity) * 100
Utilization (%) = (1.1 dolls per minute / 1.5 dolls per minute) * 100
Utilization (%) = 0.7333 * 100
Utilization (%) ≈ 73.3%
Therefore, the utilization of the first resource is approximately 73.3%.
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(3P) Attention!!! Only if all answers are correct you get 3 points. In case four answers are correct, you get 2 points and in case three answers are correct, you get 1 point. Else, 0 points. Choose for each of the following definitions whether it matches the type of the auction (choose correct) or not (choose wrong) ---- bitte auswählen ---- 1. A Dutch auction is a descending bid auction that ends dramatically with the first bid 2. In an English auction, the auctioneer starts the bidding at the highest price 3. In an English auction, potential buyers are encouraged to bid more than the previous highest bidder 4. In a sealed-bid auction the price the winner pays depends on whether it is a first-price auction or a second-price auction --- bitte auswählen ---- 5. In a Dutch auction, the auctioneer starts the bidding at the lowest price that is acceptable to the seller bitte auswählen
1. Correct - A Dutch auction is a descending bid auction where the price starts high and gradually decreases until a bidder accepts the price.
- In an English auction, also known as an ascending bid auction, the auctioneer starts with a low opening bid and increases the price until no one is willing to bid higher.
Correct - In an English auction, potential buyers are encouraged to outbid the previous highest bidder by placing higher bids.
Correct - In a sealed-bid auction, the price the winner pays depends on whether it is a first-price auction (pays the amount they bid) or a second-price auction (pays the amount bid by the second-highest bidder).
Wrong - In a Dutch auction, the auctioneer starts with a high price and gradually lowers it until a bidder accepts the price, so the statement that the auctioneer starts at the lowest acceptable price to the seller is in.
Based on the given choices, three s are (1, 3, and 4), so the score would be 1 point.
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"A furniture store has an ad for a sofa set priced at $3800. The
customer is offered the choice of making $164.53 end of month
payments for two years. What is the implied interest rate the
customer is
The implied interest rate for the sofa set is approximately 8.5% per year. The customer would be making monthly payments of $164.53 for a total of 24 months.
To determine the implied interest rate, we can use the formula for calculating the present value of an annuity:
PV = PMT * [(1 - (1 + r)^(-n)) / r]
Where:
PV = Present value of the annuity (price of the sofa set, $3800)
PMT = Monthly payment ($164.53)
r = Monthly interest rate (to be determined)
n = Number of periods (24 months)
We need to solve for r. Rearranging the formula, we have:
r = [1 - (PV / PMT)^(1 / n)] / [1 - (1 / (1 + r))]
Substituting the given values:
PV = $3800
PMT = $164.53
n = 24
Let's solve the equation step by step:
Step 1: Convert the interest rate to a decimal
Divide the annual interest rate by 12 (since we're dealing with monthly compounding):
Annual interest rate = r * 12
Step 2: Apply the formula
r = [1 - (3800 / 164.53)^(1 / 24)] / [1 - (1 / (1 + r))]
Step 3: Iteratively solve for r
Using an iterative method, we can find the value of r that satisfies the equation. Let's start with an initial guess of r = 0.01 (1%) and refine it until we find a solution that converges.
After solving the equation, the value of r comes out to be approximately 0.0237, or 2.37%.
To convert this monthly interest rate to a percentage per annum, we multiply it by 12:
Annual interest rate = 0.0237 * 12 = 0.2844
Finally, we express the annual interest rate as a percentage to two decimal places:
Implied interest rate = 28.44%
Therefore, the implied interest rate charged to the customer, with monthly compounding, is approximately 2.84%.
The complete question is:
"A furniture store has an ad for a sofa set priced at $\$ 3800$. The customer is offered the choice of making $\$ 164.53$ end of month payments for two years. What is the implied interest rate the customer is being charged expressed with monthly compounding? Enter your answer as a percentage to 2 decimal places, but do not enter the $\%$ sign."
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Given a term structure of 6.4%,7.0%,7.5%,8.2%, and 8.6% for 1 to 5 years T-bonds, what is the forward rate of interest on a two-year security for the fourth year (i.e., the expected 2-year interest rate for the fourth year, E(4r2),?
The forward rate of interest on a two-year security for the fourth year can be calculated by using the formula mentioned below: (1+r5)^5 = (1+r1) (1+1f1) (1+2f2) (1+3f3) (1+4f4) (1+4f5)
Where r1 is the interest rate on a one-year bond,r5 is the interest rate on a five-year bond,f1 is the one-year forward rate,f2 is the two-year forward rate,f3 is the three-year forward rate,f4 is the four-year forward rate andf5 is the five-year forward rate.
Since we need to calculate the forward rate of interest on a two-year security for the fourth year, we have:1+r5 = (1+r1) (1+1f1) (1+2f2) (1+3f3) (1+4f4) (1+4f5)
(1)The five-year rate is 8.6% and the one-year rate is 6.4%. Thus, we have:1+0.086 = (1+0.064) (1+1f1) (1+2f2) (1+3f3) (1+4f4) (1+4f5)or 1.086 = 1.064(1+1f1)(1+2f2)(1+3f3)(1+4f4)(1+4f5)
(2)Now, we are supposed to calculate the expected 2-year interest rate for the fourth year. Let us assume that the interest rates on the one-year and two-year bonds for the fourth year are r14 and r24, respectively. Thus, we can write:(1+r5)^5 = (1+r1) (1+r24) (1+r14)^2 (1+3f3) (1+4f4) (1+4f5)
(3)On dividing Equation (3) by Equation (2), we get:(1+r24) = [ (1+r5)^5 / (1.086) ] [ (1+0.064) (1+1f1) (1+3f3) ]1.0328 = [ (1+r5)^5 / (1.086) ] [ (1+0.064) (1+1f1) (1+3f3) ]1.0328 / [ (1+0.064) (1+1f1) (1+3f3) ] = (1+r5)^5 / (1.086)r5 = [ 1.0328 / (1.064*1.075*1.082) ]^(1/3) - 1r5 = 8.79%On substituting the value of r5, we get:r24 = [ (1.0879)^5 / (1.0328) ] [ (1+0.064) (1+1f1) (1+3f3) ]^(1/2) - 1r24 = 7.67%
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A workflow rule contains an action that sends a task to a role called global sales managers, which includes? multiple users. when the workflow rule is triggered, to whom will the task be assigned?
When a workflow rule contains an action that sends a task to a role called "global sales managers" which includes multiple users, the task will be assigned to all the users within the "global sales managers" role.
In a workflow rule, when an action is configured to send a task to a specific role, such as "global sales managers," it indicates that the task should be assigned to all the users who are part of that role. Roles in workflow rules are used to assign tasks, approvals, or other actions to a group of users who share a common role or responsibility within an organization.
By assigning the task to the "global sales managers" role, all the users who are part of that role will receive the task assignment. This allows for efficient distribution of tasks among a group of individuals responsible for overseeing sales management at a global level. Each user within the role will have the responsibility to complete the assigned task based on their specific role and expertise.
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Write a differential equation that fits the physical description. the rate of change of the population of a certain species
A differential equation that fits the physical description of the rate of change of the population of a certain species is the exponential growth differential equation.
The exponential growth differential equation represents population growth that occurs without any limiting factors. It is given by dP/dt = kP, where dP/dt represents the rate of change of the population size (P) with respect to time (t), and k is the growth rate constant. This equation describes how the population's growth rate is directly proportional to its current size.
As the population increases, the rate of growth also increases proportionally. This differential equation models unrestricted population growth, such as in ideal conditions where resources are abundant and there are no limitations to population growth.
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Preferred stock valuation Jones Design wishes to estimate the value of its outstanding preferred stock. The preferred issue has a par value of $80 and pays an annual dividend of $4.50 per share. Similar-risk preferred stocks are currently earning an annual rate of return of 11.1%.
a. What is the market value of the outstanding preferred stock?
b. If an investor purchases the preferred stock at the value calculated in part a, how much does she gain or lose per share if she sells the stock when the required return on similar-risk preferred stocks has risen to 12.5%?
a. The market value of the outstanding preferred stock is $ per share. (Round to the nearest cent.)
b. If the required return on similar-risk preferred stocks has risen to 12.5%, the value of the stock will be $ per share. (Round to the nearest cent.)
If an investor purchased the preferred stock at the value calculated in part a and sells the stock when the required return on similar-risk preferred stocks has risen to 12.5%, the gain or loss is $ per share. (Round to the nearest cent. Enter a positive number for a gain and a negative number for a loss.)
If an investor purchased the preferred stock at the value calculated in part a and sells the stock when the required return on similar-risk preferred stocks has risen to 12.5%, the gain or loss is -$4.54 per share.
a. The market value of the outstanding preferred stock is $40.54 per share.
Explanation: To calculate the market value, we divide the annual dividend ($4.50) by the required rate of return (11.1% or 0.111).
Market value = Annual dividend / Required rate of return
Market value = $4.50 / 0.111
Market value ≈ $40.54 per share.
b. If the required return on similar-risk preferred stocks has risen to 12.5%, the value of the stock will be $36 per share.
Explanation: Similar to part a, we divide the annual dividend ($4.50) by the new required rate of return (12.5% or 0.125) to calculate the updated market value.
Market value = Annual dividend / Required rate of return
Market value = $4.50 / 0.125
Market value = $36 per share.
If an investor purchased the preferred stock at the value calculated in part a ($40.54) and sells the stock when the required return on similar-risk preferred stocks has risen to 12.5%, the loss per share would be $4.54.
Loss per share = Initial market value - Updated market value
Loss per share = $40.54 - $36
Loss per share = $4.54.
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An investment offers $770 per year for 19 years, with the first
payment occurring 8 years from now. If the
required return is 10 percent, what is the value of the investment?
(HINT: Remember that when
The present value of an ordinary annuity of cash flows of the investment is found as $6,560.77.
The value of the investment, given that an investment offers $770 per year for 19 years, with the first payment occurring 8 years from now and the required return is 10 percent is $8,321.74.
Here's how you can calculate it:
To calculate the present value of an ordinary annuity of cash flows use this formula:
PV = C x (1 - (1 + r)^-n)/r
Where
PV = present value of an ordinary annuity of cash flows
C = amount of each annuity cash flow
n = number of periods in the annuity
r = interest rate per period
Given data are:
C = $770
n = 19 years (since the first payment will be made 8 years from now, we use n = 19 instead of 11)
r = 10%
To calculate PV, we substitute the given values into the formula:
PV = $770 x (1 - (1 + 0.10)^-19)/0.10
= $770 x (1 - 0.1314)/0.10
= $770 x 8.5349
= $6,560.77
Therefore, the value of the investment is $6,560.77.
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While driving his neighbor's car, Eric Gee is injured in an accident caused by an uninsured motorist. How will this loss be paid? A) The neighbor's policy will pay the full amount of the loss because
While driving his neighbor's car, Eric Gee is injured in an accident caused by an uninsured motorist. The loss will be paid by Eric Gee's neighbor's uninsured motorist coverage.
Uninsured motorist coverage (UM) is an optional coverage that protects drivers when the at-fault party in an accident doesn't have insurance. The coverage is also applicable when the driver is involved in a hit-and-run accident. Uninsured motorist insurance coverage is usually included as part of a driver's personal car insurance policy.
In this particular case, the loss incurred by Eric Gee will be paid for by his neighbor's uninsured motorist coverage. Although he was driving his neighbor's car, the car insurance policy that applies will be that of his neighbor's as the vehicle belongs to his neighbor and it was his neighbor's policy that covered the vehicle.
Uninsured motorist coverage is a supplementary coverage, which means that the coverage limit can be the same as the liability insurance policy or lower than it. It is important to note that some states mandate the purchase of UM insurance coverage while other states allow drivers to waive it. It is important for a driver to check if uninsured motorist coverage is a requirement in their state and also make sure to compare different coverage options to find the best coverage that fits their budget.
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1-If your business earns accounting profits of $50 000 and economic profits of $20 000, what are your hidden opportunity costs?
2-You earn a good salary, but you hate your boss. You develop a plan to start your own business that projects economic profits of $5000 at the end of the first year. But just as you are about to go ahead with your new business, you are offered a job for $15 000 more than you were earning before. How does that change your projected profits? Would it change your decision to start your new business? Why or why not?
3-Do you think it is correct to use economic profits as opposed to accounting profits when judging the success or failure of a business? Explain your reasons
1. If your business earns accounting profits of $50 000 and economic profits of $20 000, your hidden opportunity costs are $30,000.
Accounting profit = Total revenue – explicit costs
Economic profit = Total revenue – explicit costs – implicit costs
Opportunity costs refer to the cost of the next best alternative foregone when making a decision. In the case above, the hidden opportunity cost is the difference between accounting profit and economic profit.Opportunity cost = Accounting profit – Economic profit= $50,000 - $20,000= $30,000
2.The additional salary of $15,000 changes your projected profits from $5,000 to -$10,000. This means you would experience a loss of $10,000. The new salary would change your decision to start a new business since it is now more profitable to stick with your current job.
The additional salary of $15,000 would change your total income to $20,000 more than you were earning before. Your projected profits were $5,000 at the end of the first year if you started your own business. Since the new salary offer is more than your projected profit, it would be more profitable to stick with the new job that offers a higher salary. The change in salary would, therefore, change your decision to start a new business.
3. It is correct to use economic profits as opposed to accounting profits when judging the success or failure of a business.
Economic profits are more reliable than accounting profits when judging the success or failure of a business. Accounting profits only factor in explicit costs such as rent, wages, and materials used in production. Economic profits, on the other hand, include both explicit costs and implicit costs such as opportunity costs. This makes economic profit more accurate when calculating actual profit made by a business after accounting for all costs incurred. Economic profits are, therefore, more suitable for determining the performance of a business over time.
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What are some of the tax issues that are important for your business to avoid?
As an entrepreneur, understanding tax matters is an important aspect of operating your business. Your small business taxes are calculated by taking into account the profit or loss, as well as the company’s structure. Paying taxes as a small business owner is a must, but there are several issues that you must avoid.
Here are some of the tax issues that are important for your business to avoid:1. Failing to Collect and Pay Payroll TaxesPayroll taxes are funds that employers withhold from their employees' wages, including Social Security, Medicare, and other taxes. The law requires employers to pay payroll taxes on behalf of their employees and to submit them to the relevant government authorities.
Employers are obligated to deduct these taxes from their employees' paychecks and make their portion of the payment. The Internal Revenue Service (IRS) will impose hefty penalties on businesses that fail to pay their payroll taxes on time.2.
Misclassifying Employees as Independent ContractorsIt is critical to understand the distinction between an employee and an independent contractor when it comes to payroll tax withholding. An employee is someone who works for a company, while an independent contractor is self-employed and not subject to the same payroll tax laws.
It is important to classify employees and independent contractors correctly, as failing to do so can result in significant tax penalties.3. Overlooking Deductions and Credits There are various tax deductions and credits available to small business owners, including equipment purchases, home office deductions, and educational expenses, among others.
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Company A has $12 million in debt, with beta equal to 0,2, and $20 million in equity. Company A WACC is 12%. If company A decides to issue $3 million in debt to buyback stock, what will be the new WACC? Assume that corporate taxes are 34%, risk free rate is 4% and risk premium is 7%.
The new WACC for Company A, after issuing $3 million in debt to buyback stock, will be approximately 5.65%.
To calculate the new weighted average cost of capital (WACC) for Company A after the buyback of stock, we need to consider the changes in the capital structure.
Initially, Company A had $12 million in debt and $20 million in equity, resulting in a total capitalization of $32 million. Given that the beta is 0.2, we can assume that the company has low financial risk.
First, let's calculate the cost of equity. The risk-free rate is 4%, and the risk premium is 7%, so the cost of equity is:
Cost of Equity = Risk-Free Rate + Beta * Risk Premium
= 4% + 0.2 * 7%
= 4% + 1.4%
= 5.4%
Next, we calculate the cost of debt. The interest rate on the existing debt is not provided, so we can't calculate the precise cost of the debt.
However, assuming the existing debt interest rate is in line with the market rate, we can estimate it to be the risk-free rate plus a credit spread. Let's assume the interest rate on the existing debt is 6% (4% risk-free rate + 2% credit spread).
Now, we can calculate the new WACC after the buyback. The new capital structure will have $15 million in debt ($12 million in existing debt + $3 million in new debt) and $20 million in equity.
WACC = (Weight of Debt * Cost of Debt) + (Weight of Equity * Cost of Equity)
To find the weight of debt and equity, we divide each by the total capitalization:
Weight of Debt = Debt / (Debt + Equity) = $15 million / ($15 million + $20 million) = 0.4286
Weight of Equity = Equity / (Debt + Equity) = $20 million / ($15 million + $20 million) = 0.5714
Now we can calculate the new WACC:
New WACC = (0.4286 * 6%) + (0.5714 * 5.4%)
= 2.57% + 3.08%
= 5.65%
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What do you think it says about the costs of care in the US when it, at times, cheaper to go across international borders and receive the same quality of care for less money and get a vacation to boot? Does it not make sense for American businesses to send their employees away if it is going to reduce the costs of their products or services? Why or why not? (And before you argue to "buy American" please look from where you other stuff was made.)
True and False A. Your real income today is equal to $36,000 in 2018 prices if the CPI index grew by 25% relative to 2018 and your current salary is $45,000. B. Opportunity cost is what you gained (in value) when you chose one option over the others. C. If the price of gasoline is $3/gallon in 2016 and the price of gasoline is $2/gallon in 2021, the price index of gasoline is 1.5 in 2016 if the reference (base) year is 2016. D. Two people want to exchange the goods they produce; trade will only occur if they value their goods more than the other person's good. E. "Trade creates wealth" because comparative advantage allows specializing in products that can be traded for equal values. F. A shortage in the labor market would be caused if the wage level is set above the wage that market would provide. G. The decision for Mexican workers to come work for farmers in the United States has nothing to do with opportunity cost. H. Agricultural Economics is the study of how to produce and consume food and fiber products using scarce resources and natural resources, without considering other issues related to the agricultural sector. 1 If your income has been $25,000 a year since 2016 and the Consumer Price Index (CPI). grew by 25% from 2016 to 2021, then your real income today is $21,000 a year. J. Your nominal income in 2012 was $75,000 and the Consumer Price Index (CPI) in 2012 was 2.5% higher than the reference year, your real income was $73,170. K. Growing wheat would yield 50 bushels/acre at $7.25 per bushel with production costs at $210 per acre. Leasing out the land would yield $200/acre in rent but there are some taxes and other expenses of $40/acre. Growing cotton would yield 500 pounds per acre at $0.96/pound with production expenses at $285/acre. The farmer would choose to grow cotton and the opportunity cost is $152.50/acre. L. If the Consumer Price Index (CPI) is 110 in 2021 and the base year is 2019, then the prices of basic goods increased by 10% since 2019. M. If the CPI is 125 today, then for every $100-dollar of my income, I am $25 dollars less rich compared to the base year.
A. False. If the CPI index grew by 25% relative to 2018, your real income would be $28,800 ($36,000 adjusted for inflation).
B. True.
C. False. The price index of gasoline in 2016 would be 0.67 (2/3) if the price decreased from $3/gallon to $2/gallon.
D. True.
E. True.
F. True.
G. False. The decision for Mexican workers to work in the United States can involve opportunity cost, such as foregone employment opportunities in Mexico.
H. False. Agricultural Economics considers various aspects of the agricultural sector, including production, consumption, resource allocation, environmental impact, and other related issues.
I. False. If the CPI grew by 25% from 2016 to 2021, your real income today would be $20,000 ($25,000 adjusted for inflation).
J. False. The real income would be $72,000 ($75,000 adjusted for inflation) if the CPI in 2012 was 2.5% higher than the reference year.
K. False. The opportunity cost cannot be determined based on the given information.
L. False. The prices of basic goods increased by 10% relative to the base year (not since 2019).
M. True.
A. False. Your real income today would be $28,800, not $36,000, if the CPI grew by 25% relative to 2018.
B. True. Opportunity cost refers to the value or benefits forgone when choosing one option over others.
C. False. The price index of gasoline in 2016 would be 0.67 (2/3), not 1.5, if the price decreased from $3/gallon to $2/gallon.
D. True. Trade occurs when both parties value the goods of the other person more than their own, resulting in mutually beneficial exchange.
E. True. Trade creates wealth by allowing specialization based on comparative advantage, enabling the exchange of goods of equal value.
F. True. Setting the wage level above the market equilibrium wage would create a shortage in the labor market.
G. False. The decision for Mexican workers to work in the United States can involve opportunity cost, such as foregone employment opportunities in Mexico.
H. False. Agricultural Economics considers various aspects of the agricultural sector, including production, consumption, resource allocation, and other related issues.
I. False. If the CPI grew by 25% from 2016 to 2021, your real income today would be $20,000, not $21,000.
J. False. The real income would be $72,000, not $73,170, if the CPI in 2012 was 2.5% higher than the reference year.
K. False. The given information is insufficient to determine the opportunity cost.
L. False. The prices of basic goods increased by 10% relative to the base year, not since 2019.
M. True. If the CPI is 125 today, then for every $100 of income, you are $25 less wealthy compared to the base year.
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Question 10 Suppose there are 6 binary decision variables, X1, X2, X3. X4, X5, and X6 in an integer optimization problem, each of which indicates the selection (or not) of a project. Write a single linear constraint modeling the situation that projects 2 and 4 cannot be selected together. Edit Format Table 12pt Paragraph BIUA 2 T¹² 4 15 2 pts }
A linear constraint can be formulated as X2 + X4 <= 1 to ensure that projects 2 and 4 cannot be selected together in the integer optimization problem.
To model the situation where projects 2 and 4 cannot be selected together using linear constraints, we can introduce binary variables for each project. Let X2 and X4 represent the binary variables for projects 2 and 4, respectively. The constraint can be formulated as:
X2 + X4 <= 1
This constraint ensures that either project 2 (X2 = 1) or project 4 (X4 = 1) can be selected, but not both. If X2 and X4 are both equal to 0, indicating that neither project is selected, the constraint is satisfied.
If either X2 or X4 is equal to 1, indicating that one of the projects is selected, the constraint is also satisfied. However, if both X2 and X4 are equal to 1, violating the constraint, the constraint evaluates to 2, which is greater than 1, indicating an infeasible solution.
By incorporating this constraint into the larger integer optimization problem, we ensure that projects 2 and 4 cannot be selected together.
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Bonus Question: Which of the following is true? When a country's currency depreciates, it is more likely to increase its imports When a country's currency appreciates, it is more likely to increase its imports When a country's currency appreciates, it is more likely to decrease its imports When a country's currency appreciates, it is more likely to increase its exports
When a country's currency appreciates, it is more likely to decrease its imports. The appreciation of a currency can have an impact on a country's trade balance by reducing import levels and potentially increasing export competitiveness .
When a country's currency appreciates, it means that the value of its currency increases relative to other currencies. This makes imports more expensive for the country because it requires more of its currency to purchase the same amount of goods or services denominated in a foreign currency. Consequently, it becomes less attractive and more costly for domestic consumers and businesses to buy imported goods.
The appreciation of a country's currency affects the prices of imported goods in two ways. First, it directly increases the price of imported goods because more currency is needed to purchase the same quantity. Second, it indirectly affects the prices by increasing the cost of imported raw materials and components used in domestic production, which can lead to higher prices for finished goods.
The increase in import prices can result in a decrease in the demand for imported goods. Domestic consumers and businesses may choose to substitute imported goods with domestically produced alternatives or seek cheaper alternatives. As a result, when a country's currency appreciates, it is more likely to decrease its imports.
When a country's currency appreciates, it becomes more expensive to import goods due to the increased exchange rate. This leads to a decrease in the demand for imported goods as they become relatively more costly compared to domestic alternatives.
Therefore, the statement "When a country's currency appreciates, it is more likely to decrease its imports" is true. The appreciation of a currency can have an impact on a country's trade balance by reducing import levels and potentially increasing export competitiveness, although the latter is not addressed in the given statement.
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True or False
1. An increase in supply will decrease price most when demand is elastic and decrease it least when demand is relatively inelastic.
2. If two countries trade corn and steel, each must have an absolute advantage in the product it exports.
3. International trade between countries A and B can be mutually profitable even though A can produce every commodity more cheaply than B.
4. Foreign trade permits a country to move its consumption out beyond its domestic production-possibility curve.
5. Free market economic system is a system in which strategic and key resources are owned, regulated and controlled by the state on behalf of the community, while those resources which are of less strategic importance are left to private ownership.
6. Producer surplus is the difference between what consumers pay and the value that they receive, indicated by the maximum amount they are willing to pay.
7. A precautionary motive refers to an economic situation whereby people place a demand for money because they want to use it to buy long-term securities, bonds and other forms of property.
8. Privatisation is an economic situation whereby the government takes over the ownership or management of private business in the country.
1. An increase in supply will decrease price when demand is elastic or decrease it least when demand is relatively inelastic. Statements is True. Therefore statements are 1. True 2. False 3. True 4. True 5. False 6. False 7. False 8. False.
2. False: Absolute advantage refers to the ability to produce a good using fewer resources than another country. It is not necessary for both countries to have an absolute advantage in the products they trade.
3. True: Even if one country can produce every commodity more cheaply than another country, there can still be mutual benefits from trade due to differences in comparative advantage.
4. True: Foreign trade allows a country to access goods and services that are beyond its domestic production possibilities, expanding its consumption choices.
5. False: A free market economic system is characterized by private ownership, regulation, and control of resources and economic activities by individuals and businesses, rather than the state.
6. False: Producer surplus refers to the difference between the price at which producers are willing to sell a good and the price they actually receive. It is not related to what consumers pay or the value they receive.
7. False: A precautionary motive for holding money refers to the desire to hold money as a precaution against uncertainty or unforeseen future needs, not specifically for purchasing long-term securities or property.
8. False: Privatization refers to the transfer of ownership or management of state-owned enterprises or assets to private entities, rather than the government taking over private businesses.
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What of the following statements about the SML (Security Market Line) approach is not correct? The SML approach explicitly adjusts for systematic risk. The SML approach is applicable to all companies, including those companies which do not pay dividends. The SML approach must estimate the expected market risk premium and beta, which are stable over time. The SML approach relies on the past to predict the future, which is not always reliable.
The statement "The SML approach must estimate the expected market risk premium and beta, which are stable over time" is not correct.
The SML approach does require estimating the expected market risk premium and beta, but these values are not necessarily stable over time. The market risk premium represents the excess return expected from investing in the overall market, and it can vary based on various factors such as economic conditions, investor sentiment, and market volatility.
Similarly, beta, which measures the sensitivity of a stock's returns to market movements, can change over time as the company's risk profile and market dynamics evolve. Therefore, the SML approach acknowledges the need for estimating these variables, but their stability over time is not assumed.
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Deepak needs to borrow $7,000 and would like 24 months to pay the loan back. In addition, Deepak would like a low-interest rate and fixed payments. He owns his home and has a car that is paid for, along with jewelry and furniture. Evaluate Deepak's situation and recommend the best option from the following.
A.Borrow the money from a payday lender.
B. Take out a line of credit on his home.
C.Take out an installment loan at his local bank.
D. Take out a title loan with his car pledged as collateral.
Out of the given options, the best option for Deepak to borrow $7,000 with a low-interest rate and fixed payments is to take out an installment loan at his local bank. The correct option is C.
The installment loan is the best option for Deepak to borrow $7,000 because in this type of loan, the borrower takes a fixed amount of money from the lender, and then pays it back in installments over an agreed-upon period. In addition, he can get a lower interest rate than payday lenders or title loans because installment loans usually have a lower interest rate and he can have fixed payments which make it easier for him to budget his finances.
Taking out a line of credit on his home or a title loan with his car pledged as collateral can be risky, and he might end up losing his house or car if he fails to pay back the loan.
Therefore, it is highly recommended to take out an installment loan at his local bank as it is the safest option.
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according to consumer digest (july/august 1996), the probable location of personal computers (pc) in the home is as follows: adult bedroom: 0.03 child bedroom: 0.15 other bedroom: 0.14 office or den: 0.40 other rooms: 0.28
According to Consumer Digest (July/August 1996), the probable locations of personal computers (PCs) in the home are as follows: adult bedroom (0.03), child bedroom (0.15), other bedroom (0.14), office or den (0.40), and other rooms (0.28).
The data provided by Consumer Digest (July/August 1996) indicates the probable distribution of personal computers (PCs) in different locations within a home. The percentages provided for each location suggest the likelihood of finding a PC in that particular area.
For instance, based on the report, the highest probability of finding a PC is in an office or den (0.40), while the lowest probability is in an adult bedroom (0.03). This information can be useful for analyzing consumer behavior and preferences regarding PC placement within a home environment, providing insights into the usage patterns and convenience factors associated with different rooms.
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provide your own definition of strategic management. Explain some of the benefits of strategic management. Compare and contrast the resource based view of the firm and the knowledge based view of the firm. ( 250 words/ more than half page)
Strategic management is the process of formulating and implementing strategies to achieve an organization's long-term goals and objectives. It involves analyzing the internal and external environment, setting goals, making strategic decisions, and allocating resources effectively to gain a competitive advantage in the market.
Benefits of strategic management include:
1. Clear direction: Strategic management provides a clear sense of direction for the organization. It helps align the activities of different departments and individuals towards common goals, ensuring everyone is working towards the same purpose.
2. Competitive advantage: By analyzing the internal and external environment, strategic management enables organizations to identify their unique strengths, weaknesses, opportunities, and threats. This knowledge allows them to develop strategies that capitalize on their strengths and exploit market opportunities, leading to a sustainable competitive advantage.
3. Improved decision-making: Strategic management provides a framework for making informed decisions. It involves gathering and analyzing data, conducting market research, and considering various alternatives before making strategic choices. This systematic approach enhances decision-making effectiveness and reduces the risk of making hasty or ill-informed decisions.
4. Adaptability to change: Strategic management emphasizes continuous monitoring of the internal and external environment. This enables organizations to anticipate and respond to changes in the market, industry, or competitive landscape proactively. By being adaptable, organizations can seize new opportunities and mitigate potential threats more effectively.
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You have read in the news that due to current COVID-19 pandemic, women work less, thus they make 70 cents to the $1 that men earn. To test this hypothesis, you first regress weekly earnings of individuals (EARN, in dollars) on a constant and their Age (in years), and their level of education (EDUC, in years) a binary variable (Female), which takes on a value of 1 for female and is O otherwise. The results are: Estimated (EARN) = 570.70+ 5.33(Age) - 170.72(Female) + 18.99(EDUC), n= 110, R² = 0.084, SER= 282.12 Standard errors are as here: SE(intercept) (9.44) SE(Age)=(0.57) SE(Female) (13.52) SE(EDUC) = 3.1 (a) By carrying out 5% level of significance and using the relevant t-statistics, test for gender discrimination in here. Indicate all the steps. Justify your choice of a one-sided or two-sided alternative test. Are these results evidence enough to argue that there is discrimination against females? Why or why not? (b) Test for the joint significance of the "Age" and "Female" coefficients. Use 5% level of significance, and the result of F-statistics has become F-statistic=288.2 (Note: the required statistical table is attached) (c) Why do you think that age plays a role in earnings determination?
(a) In order to test the gender discrimination in the given scenario, we need to test the null hypothesis that there is no discrimination on the basis of gender. In other words, female employees are not paid less compared to their male counterparts. The alternative hypothesis can be a one-sided or two-sided test.
One-sided alternative test: The one-sided alternative test states that women are paid less compared to men due to COVID-19 pandemic. The null hypothesis is that women are paid equally compared to men.
Two-sided alternative test: The two-sided alternative test states that gender doesn't have any effect on the salary of employees. The null hypothesis is that there is no difference in the pay of male and female employees.
For a 5% level of significance, the critical value for t-distribution for 107 degrees of freedom is 1.656. The t-value for female coefficient is -170.72/13.52 = -12.62. As the calculated value of t is much smaller than the critical value, we can reject the null hypothesis. Thus, we can say that women are paid less compared to men.
(b) Joint hypothesis test for Age and Female coefficients:
Null hypothesis: The coefficients of Age and Female are equal to zero.
Alternate hypothesis: At least one of the coefficient is not equal to zero.
F-Statistic = ((RSS1-RSS2)/(k2-k1))/(RSS2/(n-k2))
where RSS1 = residual sum of squares for the complete model
RSS2 = residual sum of squares for the reduced model
k1 = number of parameters in the reduced model (2 in this case)
k2 = number of parameters in the complete model (4 in this case)
n = sample size (110 in this case)
RSS1 = 22972216.8
RSS2 = 23048727.9
k1 = 2
k2 = 4
n = 110
F-Statistic = ((22972216.8 - 23048727.9)/(4-2))/(23048727.9/(110-4)) = 17.84
From the F-table, the critical value at 5% level of significance for F-statistic with 2 and 103 degrees of freedom is 3.12. Since the calculated value of F-statistic is greater than the critical value, we can reject the null hypothesis. Thus, we can conclude that at least one of the coefficients is not equal to zero.
(c) Age plays a role in the earnings determination because the coefficient of age is positive (5.33), indicating that as the age of the employees increases, their earnings also increase. Older employees are generally more experienced and skilled, which leads to a higher salary.
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You are planning for a retirement by considering compounding effect of annual return. i) How much will you have if you start to invest RM 100,000 today for the next 20 years at an expected return of 15% per year?
ii) You have RM 100,000 in an investment account today. You wish to retire in 20 years with a total amount of RM 3,000,000 in the investment account. Assuming you do not save any additional fund throughout these 20 years, what annual rate of return must you earn to reach this goal? How many years do you need if your return is 15% p.a.?
iii) You have RM 100,000 in an investment account today, and you plan to deposit an additional RM 20,000 at the end of every future year until your account totals RM 3,000,000. You expected to earn 15% annually on the account. How many years will it take to reach you goal?
i) If you start investing RM 100,000 today for the next 20 years at an expected return of 15% per year, you will have approximately RM 1,336,635.43 in your account.
To calculate this, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount (RM 100,000), r is the annual interest rate (15% or 0.15), n is the number of times interest is compounded per year (assuming it is compounded annually), and t is the number of years (20).
Substituting the given values into the formula, we have A = 100000(1 + 0.15/1)^(1*20). After simplifying the equation, we find that A ≈ 1,336,635.43.
Therefore, if you start investing RM 100,000 today for the next 20 years at an expected return of 15% per year, you will have approximately RM 1,336,635.43 in your account.
ii) To find out how many years it will take to reach a goal of RM 3,000,000 with an initial investment of RM 100,000 and an annual deposit of RM 20,000 at an expected return of 15% per year, we can use the formula for the future value of an ordinary annuity: FV = P[((1 + r)^n - 1)/r], where FV is the future value, P is the annual deposit (RM 20,000), r is the annual interest rate (15% or 0.15), and n is the number of years.
We want to find the value of n when FV = RM 3,000,000. Substituting the given values into the formula, we have 3,000,000 = 20,000[((1 + 0.15)^n - 1)/0.15].
By simplifying the equation and solving for n, we find that it will take approximately 28.75 years to reach the goal of RM 3,000,000.
Therefore, it will take approximately 29 years to reach a goal of RM 3,000,000 with an initial investment of RM 100,000, an annual deposit of RM 20,000, and an expected return of 15% per year.
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Why are stories, legends and myths considered powerful ways to communicate desired values and behaviors in an organization?
Stories, legends, and myths are considered powerful ways to communicate desired values and behaviors in an organization because they engage emotions, create meaning, and provide a relatable context for understanding and internalizing those values and behaviors.
Stories, legends, and myths have inherent narrative structures that capture attention and engage emotions. They have the power to evoke empathy, inspire, and motivate individuals. By embedding desired values and behaviors within these narratives, organizations can make them more relatable and memorable for employees. Stories also provide a cultural context that helps employees understand the values and behaviors in action, creating a shared understanding and identity within the organization. These narratives offer a way to communicate complex concepts and abstract ideas in a more accessible and relatable manner. Additionally, stories have a timeless quality that can be passed down through generations, ensuring the continuity of organizational values and behaviors over time. Overall, stories, legends, and myths serve as powerful tools for organizations to effectively communicate and reinforce desired values and behaviors by tapping into the emotional and narrative aspects of human communication.
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A written explanation would be helpful, none of the other answers I can find are correct.Hint: Outstanding Balance at 20 = (0.59774)*L = L - Value of first 20 payments at time 20 Question 4 A loan of L is taken over ten years and will be repaid using the sinking fund method with equal size quarterly payments (i.e. end of quarter) each of size 387.57 at a nominal annual interest rate of q% compounded quarterly. The outstanding balance for this loan after the 20th payment is 0.59774L. Calculate L. Give your answer rounded to the nearest whole number (i.e. X).
The loan amount found is 21346 using the nominal annual interest rate.
This question involves determining the nominal annual interest rate, which will be denoted as r.
We can use the formula
[tex]A=P(1+r/n)^(nt)[/tex] to calculate the total value of the loan.
This formula can be manipulated into a form that will allow us to solve for r, as shown below:
[tex]A = P(1+r/n)^(nt)\\A/P = (1+r/n)^(nt)\\ln(A/P) = nt ln(1+r/n)\\r = n((A/P)^(1/nt) - 1)[/tex]
where A is the total value of the loan, P is the quarterly payment, n is the number of times that the loan is compounded in a year (in this case, n=4), and t is the time that the loan is outstanding (in this case, t=10 years).
If we plug in the values that we know, we get:
[tex]A = 387.57*(4*10) = 155028\\r = 4*((1 - 0.59774L/L)^(1/(4*10)) - 1)\\ = 0.007527[/tex]
Using these values for A and r, we can solve for P using the sinking fund formula:
Outstanding Balance at 20 = (0.59774)*L
= L - Value of first 20 payments at time
[tex]20(0.59774)*L = P*(1 + r/4)^60 - P*((1 + r/4)^20 - 1)/(r/4)(0.59774)\\L = P*(1.019038)^60 - P*(1.007527)^20/(0.007527)0.59774\\L = 387.57*(1.019038)^60 - 387.57*(1.007527)^20/0.007527\\L = 21346\\[/tex]
Rounded to the nearest whole number, L = 21346.
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Hero Jeans is a manufacturer of jeans. It costs them $5 to produce each pair of jeans. Hero Jeans sells each pair of jeans to the wholesaler at a 40% markup, who then sells to the retailer at a 30% margin. Finally, the retailer sells the pair of jeans to the consumers at a 50% markup. What is the price paid by consumers for a pair of jeans?
The price paid by consumers for a pair of jeans from Hero Jeans is $13.65.
To calculate the final price paid by consumers for a pair of jeans, need to follow the markup chain.
Hero Jeans' cost to produce each pair of jeans is $5.
The wholesaler purchases the jeans from Hero Jeans with a 40% markup. This means the wholesaler adds 40% of the cost to the jeans' price.
Markup by the wholesaler = 40% of $5 = $2
Wholesaler's cost for each pair of jeans = $5 (cost price) + $2 (markup) = $7
The retailer purchases the jeans from the wholesaler at a 30% margin. This means the retailer adds 30% of their cost to the jeans' price.
Margin for the retailer = 30% of $7 = $2.1
Retailer's cost for each pair of jeans = $7 (wholesaler's price) + $2.1 (margin) = $9.1
Finally, the retailer sells the jeans to consumers with a 50% markup. This means the retailer adds 50% of their cost to the jeans' price.
Markup by the retailer = 50% of $9.1 = $4.55
Price paid by consumers for a pair of jeans = $9.1 (retailer's price) + $4.55 (markup) = $13.65.
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