The Results of Fate In Romeo and Juliet Essay - 1050 Words

Fate is a hidden, but unavoidable force that leads to certain consequences in people’s lives. The theme of fate plays a crucial role in the main characters of the play, Romeo and Juliet, by William Shakespeare. Romeo and Juliet share a destiny that dooms them to tragic deaths immediately after the exchange of their zealous love. Despite their resolute attempts to challenge their destiny, the lovers still succumb to the inexorable powers of fate. In the Shakespearean play, Romeo and Juliet, the principle of fate propels the lovers together with infatuation, tears them apart through a bitter demise, yet, ensures peace in Verona for many future generations. To start, Romeo and Juliet are united by the work of fate. It is completely unheard†¦show more content†¦He is heartbroken that Rosaline does not return the love he has for her and prone to becoming fond of another woman. As shown in Act 1 of the play, fate manipulates Romeo and Juliet into a lovesick relationship that can only lead to a very tragic end. On the contrary, fate also shreds Romeo and Juliet’s love with death and melancholy. The two have just been married, and they are at the apex of their love. Before they could even have a proper honeymoon, Tybalt comes with bad intentions. He feels that Romeo has insulted the Capulets by coming to their party. Tybalt ends up killing Mercutio, one of Romeo’s dearest friends, in a fit of rage. Romeo is thirsty for revenge and cannot sit back after his friend has just been killed so he hunts down Tybalt and murders him without thinking of the consequences. He instantly realizes the major flaw in what he has just done when he cries, â€Å"O I am fortune’s fool!† (125) Tybalt’s violent nature, which eventually causes his death, is simply a part of fate taking its course. Another instance where fate contributes to ending Romeo’s love with Juliet is when Romeo screams, â€Å"Then I deny you stars!† (213) He believes that Juliet is dead and wan ts to reject his fate by killing himself to be with her in death, but she is not dead. It is incredibly tragic for Juliet when she wakes up from her long sleep toShow MoreRelatedRomeo and Juliet906 Words   |  4 PagesRomeo and Juliet: Essay Topic Sentence: Who, in your opinion, is most to blame for this tragedy? One of Shakespeare’s most known plays is the love story between Romeo and Juliet, which ends up as a tragedy. There are many different reasons and causes to why this tragedy occurred between the two young lovers, Romeo and Juliet, Friar Laurance, their parents and also the element of fate. Romeo and Juliet are two young lovers who seem to rush the love between each other by becoming married to afterRead MoreFate Of William Shakespeare s Romeo And Juliet999 Words   |  4 PagesFate in Romeo and Juliet In modern times, and in the Elizabethan era, fate plays an important role in people s lives. Many people believe it to be written in stone, and unchangeable. Many others believe it to be controlled by a person s own actions. In Romeo and Juliet, fate is one of the main themes, described as having power over many of the events in the play. Fate is often called upon, wondered about, and blamed for mishaps. However, where fate is blamed in the Read MoreWilliam Shakespeare s Romeo And Juliet1549 Words   |  7 PagesOne of Shakespeare’s most eminent plays, Romeo and Juliet is a tale revolving around a pair of star-crossed lovers whose premature relationship must go undiscovered because of their feuding families. However, in the arduous process of protecting its secrecy, several essential figures including Romeo, Friar Lawrence and the theme of fate play decisive roles that hold responsibility in the turnout of events that lead to a tragic conclusion. Romeo, the lover himself is rebellious and desperate for loveRead MoreWilliam Shakespeare s Romeo And Juliet1102 Words   |  5 Pages Why Fate Is Realistic Many people believe fate does not actually exist in the world. They trust that things play out in a result of actions they have made with their own free will. However, other people believe that fate is what determines occurrences in their lives. In the play Romeo and Juliet written by William Shakespeare, there are many events that make fate realistic. The fate throughout the play is what made the play interesting and is a main reason of the two lovers meeting. Romeo and JulietRead MoreWilliam Shakespeare s Romeo And Juliet1708 Words   |  7 Pagespurpose, relies largely on fate, or predetermined forces causing events to occur. Therefore, people believe that their pathway through life is paved for them, and external factors cause them to face specific challenges. On the contrary, a number of people believe that their pathway through life is based solely on their own actions, and no external forces are able to determine what lies in one’s future. These contradictory belief s can be seen in the play Romeo and Juliet by William Shakespeare, asRead MoreRomeo Is Completely to Blame for the Tragic Outcome in the Play.1359 Words   |  6 PagesRomeo is completely to blame for the tragic outcome in the play. William Shakespeares play Romeo and Juliet is without doubt one of the most well-known love story. Throughout the five acts of the play, one tragedy follows another, with the famous suicide of Romeo and Juliet as a tragic conclusion. Throughout the play, it may seem that Romeo caused these events to unfold, however it is unjust to say that he bears all responsibility for the tragedy. The decisions, actions and circumstances thatRead MoreRomeo And Juliet Fate And Free Will Analysis1256 Words   |  6 Pagesexhibit fate or free will. An example of free will is Donald Trump’s decision to exit the Paris Agreement. According to Trump, the deal would cause energy prices to rise and decrease jobs available. Considering the fact that the United States have the second largest carbon footprint, it is likely Trump’s decision will have a negative impact on the environment. Another example that demonstrates fate and free will is from Shakespeare’s famous play, Romeo and Juli et. The tragedy begins with Romeo attendingRead MoreFate In Romeo and Juliet Essay1169 Words   |  5 PagesRomeo and Juliet by William Shakespeare, is a famous tragic love story that bases on a young couple from the rival families, the Montagues, and the Capulets, in which the death of the young couple finally end the ‘ancient grudge’ between the two families. Their result of death is believed to be cause mostly by the fate, which brings them closer and closer to their inevitable destiny, death. In many places in the play Shakespeare also uses words like ‘fortune’, ‘sail’, ‘stars’ to reveal that fateRead More Theme of Fate in Romeo and Juliet by Shakespeare Essay1321 Words   |  6 Pagesas a result of the decisions that they make with their own free will. Others believe that whatever happens during the course of their lives is inevitable and every event is laid out before them like a road map to life, in other words, fate. Will iam Shakespeares play, Romeo and Juliet has fate as an exceptionally crucial element which makes fate as important as any character in the production. The events leading up to and during the party were definitely caused by fate. The moment that Romeo and JulietRead MoreThe Role of Fate in Shakespeares Romeo and Juiliet807 Words   |  3 PagesFate. Who would have guessed that this four letter, one-syllable word would play such a big role in Shakespeares Romeo and Juliet? Many people believed that it was free choices that led to the tragic ending of Shakespeares Romeo and Juliet, but it was really fate. When looking up fate using dictionary.com, it says that fate’s something that unavoidably befalls a person; fortune, but in Romeo and Juliet, fate is reality. Perhaps the biggest and most overlooked example of fate was in the Prologue

Marijuana Should Be Legal Debate Over The United States

Marijuana has been a tremendous on-going legal debate over the last few centuries in America. In the last few decades marijuana use in America has been on the rise, especially among young adults. Marijuana comes from the hemp plant known as Cannabis Sativa. In 2727 B.C, the Chinese were the first to document the use of marijuana for medicine. Chinese would use the seeds of the hemp plant for food (Borges, 2014, Ch. 15). Marijuana has been known for a lot more than just getting high though. In the past it’s been used for fabric, food, incense, cloth, and much more. In the last few decades America has come up with a variety of nicknames for the Marijuana. Some common nicknames include Cannabis, Skunk, Ganja, Maryjane, Refeer, bud and tree. Many of these street names arrived from the leafy appearance and its vigorous smell. Weed has over 400 chemicals in it, about 70 of the 400 are known as cannabinoids (Borges, 2014, Ch. 15). The main chemical in marijuana is THC which is short for delta-9-tetrahydrocannabinol. THC not only affects the chemicals in your brain, but it also increases heart rate and gives the user bloodshot eyes, dry mouth, and increase appetite. There are two ways to administer cannabis into your system. The first is through consumption of baked goods, the second and most common is smoking. If eaten it take approximately 90 minutes to reach its peak point, smoking usually takes roughly 5-10 minutes (Borges, 2014, ch. 15). The body, through smoking, absorbsShow MoreRelatedWhy Marijuana Should be Legalized Essay example1689 Words   |  7 PagesDebate on why Marijuana should be legalized Marijuana is a public name for an illegal substance (drug) produced from the Cannabis (Cannabis sativa) plant. It is also called weed, ganja, grass, kaya and pot. The drug has many chemical compounds and in particular, it has THC (delta-9-tetrahydrocannabinol) which is responsible for changing mind functions leading to alternations of cognition, mood, behavior, perception and consciousness. â€Å"It is the most widely used illicit substance in the world† (WorldRead MoreA Call for the Continued Prohibition of Marijuana and Other Drugs1239 Words   |  5 PagesA Call for the Continued Prohibition of Marijuana and Other Drugs Alcohol, if consumed in high quantities, poses serious personal and public health and safety issues. In the realm of public safety, engaging in said activity significantly impairs cognitive activity, affecting one’s ability to utilize proper judgment and operate machinery, among other things. Thus, operating machinery while under the influence of alcohol puts not only the operator, but also others in the vicinity of the operator,Read MoreShould Marijuana Be Legalized?1456 Words   |  6 Pagesuse of marijuana is illegal in over half of the United States, but it is still the third most popular recreational drug in the United States. The debate for this drug to be legal has been going on for many years; some states have legalized the drug for medical use, and some for recreational use as well. Other states seem to disagree; they are not in favor of making the drug legal for medical use or recreational use. It has been proven that marijuana has a positive impact on society. Mari juana shouldRead MoreMarijuana V. Alcohol Essay770 Words   |  4 PagesMarijuana v. Alcohol Grass. Ganja. Kush. Weed. Pot. Mary Jane. Marijuana. Marijuana is an illegal substance in America, used by people to get â€Å"high.† It has become a recent debate over whether it is right to legalize marijuana or to keep it as an illegal substance. Many people believe that marijuana is a dangerous substance that should never be legalized in America. These people focus on marijuana which is harmless in comparison to alcohol, which is a legal and widely used substance in AmericaRead MoreRunning for Texas Senator1493 Words   |  6 Pagesin a campaign. It helps build a competitive campaign because one is willing to win at all costs. Money contributes to the advertisements, commercials, and sending out letters to the fellow citizens one represents. At all costs, any Texas candidate should have more than decent amount of money if one wishes to run a campaign. The candidate’s goal with the advertisement, mail, and commercials is simply to get their name across the American people. That would likely have to be a catchy name as well, oneRead MoreThe War On Marijuana Should Be Legalized915 Words   |  4 PagesNO THANKSUSE THE APP Marijuana Coker Ashley Coker Mrs. Petti 4th Period 30 September 2015 The War On Marijuana Marijuana is the most commonly used drug in the United States. However it has the singular distinction of being both a commonly used illegal substance and also a legally prescribed medical substance for mentally ill patients in many states. â€Å"Marijuana has been scientifically proven to reduce pain in patients suffering from conditions like Rheumatoid Arthritis.†(Drug Policy Alliance)Read MoreShould Marijuana Be Legalized?1596 Words   |  7 Pagesbefore a user can safely and completely make the decision if trying Marijuana is a good idea? Many do not want the drug to be legalized because they claim that Cannabis is a â€Å"gateway drug†, meaning it will cause people to try harder drugs once their body builds up a resistance to Marijuana, because a stronger drug will be needed to reach a high state. This argument is often falsely related to the medical side of the debate over legalization. It is claimed that this would be a reason not to legalizeRead MoreEssay on Le galization of Marijuana610 Words   |  3 PagesLegalization of Marijuana One debate that keeps coming up time and again is the topic of the legalization of marijuana. Marijuana is the most widely used illegal drug. Nearly one in three teenagers have at least tried marijuana by the time they graduate high school. It is also gets the most publicity for its legalization. Over thirty pro-legalization organizations have been displayed on the Internet alone. 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Now being a young adult and having my own personal experience with the drug and knowing its effects on o thers, I wonder why it’s not legal. Why is it that this drug has become illegal all over the world? The debate to legalize marijuana in the United States of America

Fin 331 Study Guide Free Essays

Finance Final Study Guide FIN 331 – Moser – Study Guide for Exam 1 – Spring 2011 Important Concepts * Forms of Business Organization * Proprietorship- an unincorporated business owned by one individual * Partnership- legal arrangement between two or more people who decide to do business together * Advantages * Ease of formation * Subject to few regulations * No corporate income taxes * Disadvantages * Limited life * Unlimited liability * Difficult to raise capital * Corporation- legal entity created by a state, and it is separate and distinct from its owner and managers. Advantages * Unlimited life * Easy transfer of ownership * Limited liability * Ease of raising capital * Disadvantages * Double taxation * Cost of set-up and report filing * Conflicts between Managers and Stockholders * Managers are naturally inclined to act in their own best interests (which are not always the same as the interest of stockholders). * But the following factors affect managerial b ehavior: * Managerial compensation packages * Direct intervention by shareholders * The threat of firing * The threat of takeover * Shareholder Value The price at which the stock would sell if all investors had all knowable information about a stock. We will write a custom essay sample on Fin 331 Study Guide or any similar topic only for you Order Now * The primary financial goal of management is shareholder wealth maximization, which translates to maximizing stock price. * Value of any asset is present value of cash flow stream to owners. * Most significant decisions are evaluated in terms of their financial consequences. * Stock prices change over time as conditions change and as investors obtain new information about a company’s prospects. * Intrinsic value * In equilibrium, a stock’s price should equal its â€Å"true† or intrinsic value. Intrinsic value is a long-run concept. * To the extent that investor perceptions are incorrect, a stock’s price in the short run may deviate from its intrinsic value. * Ideally, managers should avoid actions that reduce intrinsic value, even if those decisions increase the stock price in the short run. * Capital allocation process * In a well-functioning economy, capital flows efficiently from those who supply capital to those who demand it. * Suppliers of capital – individuals and institutions with â€Å"excess funds. † These groups are saving money and looking for a rate of return on their investment. Demanders or users of capital – individuals and institutions who need to raise funds to finance their investment opportunities. These groups are willing to pay a rate of return on the capital they borrow. * Direct transfers * Investment banking house * Financial intermediaries * Types of financial markets * Physical asset markets versus financial asset markets * Physical asset markets are for products such as wheat, autos, real estate, computers, and machinery. * Financial asset markets, on the other hand, deal with stocks, bonds, notes, and mortgages. Spot markets versus future markets * Spot markets are markets in which assets are bought or sold for â€Å"on-the-spot† delivery. * Future markets are markets in which participants agree today to buy or sell an asset at some future date * Money markets versus capital markets * Money markets are the markets for short-term, highly liquid debt securities. The New York, London, and Tokyo money markets are among the world’s largest. * Capital Markets are the markets for intermediate- or long-term debt and corporate stocks. The NYSE * Primary markets versus secondary markets Primary markets are the markets in which corporations raise new capital. If a company were to sell a new issue of common stock to raise capital. * Secondary markets are markets in which existing, already outstanding securities are traded among investors. * Private markets versus public markets * Private markets, where transactions are negotiated directly between two parties, are differentiated from†¦public markets. Ex. Common stock and corporate bonds * Public markets, where standardized contracts are traded on organized exchanges. Ex. Bank loans and private debt payments to an insurance company. * Importance of financial markets * Well-functioning financial markets facilitate the flow of capital from investors to the users of capital. * Markets provide savers with returns on their money saved/invested, which provides them money in the future. * Markets provide users of capital with the necessary funds to finance their investment projects. * Well-functioning markets promote economic growth. * Economies with well-developed markets perform better than economies with poorly-functioning markets. * Derivatives A derivative security’s value is â€Å"derived† from the price of another security (e. g. , options and futures). * Can be used to â€Å"hedge† or reduce risk. For example, an importer, whose profit falls when the dollar loses value, could purchase currency futures that do well when the dollar weakens. * Also, speculators can use derivatives to bet on the direction of future stock prices, inte rest rates, exchange rates, and commodity prices. In many cases, these transactions produce high returns if you guess right, but large losses if you guess wrong. Here, derivatives can increase risk. * Financial institutions Commercial banks * Bank of America, Citibank, Wells Fargo * Investment banks * Help companies raise capital * Financial services corporations * Conglomerates that combine many different financial institutions within a single corporation. * Credit unions * Employees, members or organization * Pension funds * Life insurance companies * Mutual funds * Hedge funds * Largely unregulated * Large minimum investment * Exchange traded funds (ETF’s) * Private equity companies * Like hedge funds * IPO * An initial public offering (IPO) is where a company issues stock in the public market for the first time. â€Å"Going public† enables a company’s owners to raise capital from a wide variety of outside investors. Once issued, the stock trades in the secon dary market. * Public companies are subject to additional regulations and reporting requirements. * Efficient market hypothesis – implications * Securities are normally in equilibrium and are â€Å"fairly priced. † * Investors cannot â€Å"beat the market† except through good luck or better information. * Efficiency continuum * When markets are efficient, investors can buy and sell stocks and be confident that they are getting good prices. When markets are inefficient, investors may be afraid to iinvest and may put their money â€Å"under the pillow,† which will lead to a poor allocation of capital and economic stagnation. * Balance sheet * Provides a â€Å"snapshot† of a firm’s position at a specific point in time. The left side shows the assets that the company owns, while the right side shows the firm’s liabilities and stockholders’ equity, which are claims against the firm’s assets. * Assets * Current assets: * Cash and equivalents * A/R * Inventories * Total Current Assets * Net fixed assets: Net plan and equipment(cost minus depreciation) * Other assets expected to last more than a year * Total Assets * Liabilities and Equity * Current liabilities: * A/P * Accruals * Notes Payable * Total current liabilities * Long-term bonds * Total debt * Common equity: * Common stock * Retained earning * Total common equity * Total liabilities and equity * Income statement * Summarizes a firm’s revenues and expenses over a given period of time. * Sales * (COGS) * (Other Expenses) * (Depreciation) * EBIT * (Interest Expense) * EBT * (Taxes) * Net Income Statement of cash flows * Reports the impact of a firm’s activities on cash flows over a given period of time. Shows how much cash the firm is generating. * Cash @ end 2007 * O/A * I/A * F/A * Cash @ end 2008 * Working capital * Anything that is cash or can be converted to cash within a year. A/R and Inventory * Net working capital (NWC) * Current assets (A/R, Inventory, Cash) – (Payables + Accruals) * Free cash flow (FCF) * Everything left over for investors. Amount of cash that can be withdrawn to investors without harming the ability of the company to operate and produce. FCF = EBIT(1-T) + Depreciation – (Capital expenditures + Increase in NWC) (Income Statement) ( in gross FA/current) Balance Sheet * Corporate and personal taxes * Both have a progressive structure (the higher the inc ome, the higher the marginal tax rate). * Corporations * Rates begin at 15% and rise to 35% for corporations with income over $10 million, although corporations with income between $15 million and $18. 33 million pay a marginal tax rate of 38%. * Also subject to state tax (around 5%). * Individuals * Rates begin at 10% and rise to 35% for individuals with income over $349,700. May be subject to state tax. * Tax treatment of interest and dividends * Interest paid – tax deductible for corporations (paid out of pre-tax income), but usually not for individuals (interest on home loans being the exception). * Interest earned – usually fully taxable (an exception being interest from a â€Å"muni†). * Dividends paid – paid out of after-tax income. * Dividends received – Most investors pay 15% taxes. * Investors in the 10% or 15% tax bracket pay 0% on dividends in 2008-2010. * Dividends are paid out of net income which has already been taxed at the corporat e level, this is a form of â€Å"double taxation†. A portion of dividends received by corporations is tax excludable, in order to avoid â€Å"triple taxation†. * Taxes – carrybacks and carryforwards * Tax Loss Carry-Back and Carry-Forward – since corporate incomes can fluctuate widely, the Tax Code allows firms to carry losses back to offset profits in previous years or forward to offset profits in the future. * Taxes – capital gains * Defined as the profits from the sale of assets not normally transacted in the normal course of business, capital gains for individuals are generally taxed as ordinary income if held for less than a year, and at the capital gains rate if held for more than a year. Corporations face somewhat different rules. * Importance of ratios * Ratios standardize numbers and facilitate comparisons. * Ratios are used to highlight weaknesses and strengths. * Ratio comparisons should be made through time and with competitors. * Trend analysis. * Peer (or industry) analysis. * 5 categories of ratios * Liquidity: Can we make required payments? * Current = current assets/current liabilities * Quick = Current assets-inventories/current liabilities * Asset management: right amount of assets vs. sales? * Inventory T/O Ratio = Sales/Inventories * Days sales outstanding(DSO) = AR/(Sales/365) Fixed Asset T/O Ratio = Sales/Net Fixed AssetsNet FA=Balance Sheet * T/A Turnover = Sales/Total AssetsTA=Balance Sheet * How many times the PM is earned each year * Below avg. T/A T/O means that it has more assets than it needs * Debt management: Right mix of debt and equity? * Debt Ratio = Total Debt/Total AssetsBalance Sheet * Times-Interest-Earned(TIE) = EBIT/Interest ExpenseI ncome Statement * Profitability: Do sales prices exceed unit costs, and are sales high enough as reflected in PM, ROE, and ROA? * Operating Margin = EBIT/Sales * Profit Margin = Net income/Sales PM is how much a firm earns on its sales * Below avg. PM means that the firm’s costs are not being controlled as well as they should be, therefore they cannot charge premium prices * Basic Earning Power(BEP) = EBIT/Total Assets * ROA = Net Income/Total Assets * ROE = Net Income/total common equityBalance Sheet * ROE and shareholder wealth are correlated, but problems can arise when ROE is the sole measure of performance. * ROE does not consider risk. * ROE does not consider the amount of capital invested. * Might encourage managers to make investment decisions that do not benefit shareholders. ROE focuses only on return and a better measure would consider risk and return. * Market value: Do investors like what they see as reflected in P/E and M/B ratios? * Price/Earnings (P/E) ratio = Price per share/Earnings per share * Earnings per share * Market/Book Ratio (M/B)= Market price per share/Book value per share * Book Value per share = Common equity/Shares outstandingBalance Sheet * P/E: How much investors are willing to pay for $1 of earnings. * M/B: How much investors are willing to pay for $1 of book value equity. For each ratio, the higher the number, the better. * P/E and M/B are high if ROE is high and risk is low. * DuPont system * ROE = Profit Margin(PM) X Total Asset Turnover X Equity Multiplier(EM) NI/Sales Sales/TA TA/Total common equity I______ _______I I ROA * ROA Focuses on expense control (PM), asset utilization (TA TO), and debt utilization (equity multiplier). * Uses of freed up cash * Old A/R * (New A/R) * Cash freed up * Uses: * Repurchase stock * Expand business * Reduce debt * All these actions would likely improve the stock price. * Limitations of ratio analysis Comparison with industry averages is difficult for a conglomerate firm that opera tes in many different divisions. * â€Å"Average† performance is not necessarily good, perhaps the firm should aim higher. * Seasonal factors can distort ratios. * â€Å"Window dressing† techniques can make statements and ratios look better. * Different operating and accounting practices can distort comparisons. * Sometimes it is hard to tell if a ratio is â€Å"good† or â€Å"bad. † * Difficult to tell whether a company is, on balance, in strong or weak position. * Sales forecast * Use historical sales data (approx. 5 years) Collect input from product development, marketing, and operations * Sales growth has a cost * Bad forecasts have a cost * Forecasting sales is the most important input in predicting future financial performance * Additional Financing Needed (AFN) * AFN = (A*/S0)? S – (L*/S0) ? S – M(S1)(RR) * = Projected asset increase – Spontaneous liabilities increase – Increase in retained earnings (How many assets to b uy)L*(liab. Bs) M(S1)=future profits * A* = assets * L* = spontaneous liabilities * S = sales * M = profit margin * RR = retention ratio * FIN 331 – Moser – Study Guide for Midterm II – Spring 2011 Important Concepts * Time Value of Money * The  idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This  core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. * Future Value (FV) * The amount to which a cash flow or series of cash flows will grow over a given period of time when compounded at a given interest rate. * Finding the FV of a cash flow or series of cash flows is called compounding * What is the FV of an initial $100 after 3 years, if I/YR = 10%? N=3I/YR=10PV=100PMT=0FV=CPT * Future Value = 133. 10 * Present Value (PV) * The value today of a future cash flow or series of cash flows * What is the PV of $100 due in 3 years, if I/YR= 10%? * N=3I/YR=10PV=CPTPMT=0FV= 100 * PV=-75. 13 * Solving for Interest Rate * Solving for I: What interest rate would cause $100 to grow to 125. 97 in 3 years? * N=3I=CPTPV=100 PMT=0 FV=125. 97 * Interest Rate = 8% * Solving for # of Time Periods * N = Number of periods involved in the analysis. * If sales grow at 20% per year, how long before sales double? * N=? I/YR=20PV=-1PMT=0 FV=2 * N=3. 8 * Ordinary Annuity vs. Annuity Due Ordinary Annuity * Payments occur at the end of each year(deferred annuity) * Set calculator to END * FV * 3-year ordinary annuity of $100 at 10%? * N=3 I/YR=10 PV=0 PMT=100 FV=CPT * FV=331 * PV * N=3 I/YR=10 PV=CPT PMT=100 FV=0 * PV=-248. 69 * Annuity Due * Set calculator to BEGIN * The payments are made at the beginning of each year * FV * 3-year annuity due of $100 at 10%? * N=3 I/YR=10 PV=0 PMT=100 FV=CPT * FV=364. 10 * PV * N=3 I/YR=10 PV=CPT PMT=100 FV=0 * PV=273. 55 * Perpetuity * An annuity with an extended life. * N=infinity * PV of a perpetuity = PMT/I * PV=PMT/I=$100/0. 1 = $1,000 Compound Interest * A 20-year-old student wants to save $3 a day for her retirement. Every day she places $3 in a drawer. At the end of the year, sh e invests the accumulated savings ($1,095) in a brokerage account with an expected annual return of 12%. * How much money will she have when she is 65 years old? * N=45 I/YR= 12 PV=0 PMT= 1095 FV=CPT * FV = 1,487,262 * Solving for annual payment * PV of uneven cash flows * * Effect of compounding more often * Compounding more often results in building interest upon interest * Nominal vs. Periodic vs. Effective Interest Rate * Written into contracts, quoted by banks and brokers. Not used in calculations or shown on time lines. * Nominal rate (INOM) – also called the quoted or stated rate. An annual rate that ignores compounding effects. * INOM is stated in contracts. Periods must also be given, e. g. 8% quarterly or 8% daily interest. * Periodic rate (IPER) – amount of interest charged each period, e. g. monthly or quarterly. * * IPER = INOM/M, where M is the number of compounding periods per year. M = 4 for quarterly and M = 12 for monthly compounding. * Effective (or equivalent) annual rate (EAR = EFF%) – the annual rate of interest actually being earned, accounting for compounding. Used to compare returns on investments with different payments per year. Used in calculations when annuity payments don’t match compounding periods. * EFF% for 10% semiannual investment * EFF%= ( 1 + INOM/M )M – 1 * = ( 1 + 0. 10/2 )2 – 1 = 10. 25% * Should be indifferent between receiving 10. 25% annual interest and receiving 10% inter est, compounded semiannually. * Semiannual/quarterly/monthly compounding * Annually * N=3 I/YR=10. 25 PV=0 PMT=100 FV=CPT * FV=331. 80 * 100(1. 025)^3=331. 80 * Semiannual * N=6 I/YR=5. 125 PV=0 PMT = 100 FV=CPT * FV=682. 33 * 100(. 5125)^6 * Quarterly * N=12 I=2. 6 PV=0 PMT=100 FV=CPT * * Loan Amortization * Amortization tables are widely used for home mortgages, auto loans, business loans, retirement plans, etc. * Financial calculators and spreadsheets are great for setting up amortization tables. * A loan that is to be repaid in equal amounts on a monthly, quarterly, or annual basis * Bonds * A long-term debt instrument in which a borrower agrees to make payments of principal and interest, on specific dates, to the holders of the bond. * Treasury * Government bonds * No default risk * Municipal * Bonds issued by state and local governments * Some default risk Advantage: Munis are exempt from Federal Taxes and from state taxes if the holder is resident of issuing state. * Corporat e * Issued by business firms * Exposed to default risk * Higher the risk, the higher interest rate is demanded * Foreign * Issued by a foreign government * Currency exchange issues * Par value * face amount of the bond, which is paid at maturity (assume $1,000). * Coupon interest rate * Stated interest rate (generally fixed) paid by the issuer. Multiply by par value to get dollar payment of interest. * Maturity date * Years until the bond must be repaid. * Yield to maturity Rate of return earned on a bond held until maturity (also called the â€Å"promised yield†). * Call Provision * Allows issuer to refund the bond issue if rates decline (helps the issuer, but hurts the investor). * Borrowers are willing to pay more, and lenders require more, for callable bonds. * Most bonds have a deferred call and a declining call premium. * Sinking Fund * Provision to pay off a loan over its life rather than all at maturity. * Similar to amortization on a term loan. * Reduces risk to inve stor, shortens average maturity. * But not good for investors if rates decline after issuance. * Convertible Bond May be exchanged for common stock of the firm, at the holder’s option. * Warrant * Long-term option to buy a stated number of shares of common stock at a specified price. * Puttable bond * Allows holder to sell the bond back to the company prior to maturity. * Indexed bond * Interest rate paid is based upon the rate of inflation. * Valuing a bond * Problem * Discount bond vs. Premium bond and how you can tell by comparing the coupon and the YTM * Bond Values over time * Solving for YTM * Expected Total return= YTM = (Expected Current Yield) + (Expected Capital Gains Yield) * CY=Annual coupon payment/Current Price . 09(1000)/887 * CGY= Change in price/Beginning price * Or CGY = Current yield + Capital gains yield * Interest rate risk * The concern that rising interest rates will cause the value of a bond to fall. * 10year bond has more risk than just a 1 year bond * Reinvestment rate risk * Reinvestment rate risk is the concern that rd will fall, and future CFs will have to be reinvested at lower rates, hence reducing income. * EXAMPLE: Suppose you just won $500,000 playing the lottery. You intend to invest the money and live off the interest. * You may invest in either a 10-year bond or a series of ten 1-year bonds. Both 10-year and 1-year bonds currently yield 10%. * If you choose the 1-year bond strategy: * After Year 1, you receive $50,000 in income and have $500,000 to reinvest. But, if 1-year rates fall to 3%, your annual income would fall to $15,000. * If you choose the 10-year bond strategy: * You can lock in a 10% interest rate, and $50,000 annual income for 10 years, assuming the bond is not callable. * Semiannual bonds * Multiply years by 2: Number of periods = 2N * Divide nominal rate by 2: Periodic rate (I/YR) = rd/2 * Divide annual coupon by 2: PMT = Annual coupon/2 * Yield to Call * Problem * Default risk If an issuer defaults, investors receive less than the promised return. Therefore, the expected return on corporate and municipal bonds is less than the promised return. * Influenced by the issuer’s financial strength and the terms of the bond contract. * Mortgage bond vs. debenture * Mortgage bond- backed up by collateral e. g. house,car,jewelry * Debenture- Not backed up * Investment-grade vs. junk bond * Investment grade-GE bond, lower risk and thus lower return * Junk bond- Speculative bonds that have high risk, but sometimes higher return * Significant risk of going default * 2 chapters of bankruptcy Two main chapters of the Federal Bankruptcy Act: * Chapter 11, Reorganization * If company can’t meet its obligations †¦ * It files under Chapter 11 to stop creditors from foreclosing, taking assets, and closing the business and it has 120 days to file a reorganization plan. * Court appoints a â€Å"trustee† to supervise reorganization. * Management usually stays in control. * Company must demonstrate in its reorganization plan that it is â€Å"worth more alive than dead†. * If not, judge will order liquidation under Chapter 7. * Chapter 7, Liquidation * Typically, a company wants Chapter 11, while creditors may prefer Chapter 7. Priority of Claims in Liquidation * Secured creditors from sales of secured assets. * Trusteeâ⠂¬â„¢s costs * Wages, subject to limits * Taxes * Unfunded pension liabilities * Unsecured creditors * Preferred stock * Common stock * Reorganization * In a liquidation, unsecured creditors generally get zero. This makes them more willing to participate in reorganization even though their claims are greatly scaled back. * Various groups of creditors vote on the reorganization plan. If both the majority of the creditors and the judge approve, company â€Å"emerges† from bankruptcy with lower debts, reduced interest charges, and a chance for success. Formulas that will be provided * Chapters 5 and 7 from Appendix C * Instructions on switching your calculator from END to BGN mode Chapter 8 * Investment Risk * Investment risk is related to the probability of earning a low or negative actual return. * The greater the chance of lower than expected or negative returns, the riskier the investment. * stand-alone risk * The asset is considered by itself * The risk an investor would face if he or she held only this one asset. * Portfolio risk * Asset is held as one of a number of assets in a portfolio * Average returns (stocks vs. bonds) Bonds offer relatively low returns, but with relatively little risk * Stocks offer the chance of higher returns, but stocks are generally riskier than bonds * Expected return r^ * The rate of return expected to be realized from an investment; the weighted average of the probability distribution of possible results * Standard deviation (sigma) * A statistical measure of the variability of a set of observat ions * The tighter the probability distribution, the lower the risk * Measure of how far the actual return is likely to deviate from the expected return * Coefficient of variation (CV) The standardized measure of the risk per unit of return; calculated as the standard deviation divided by the expected return * CV= ? /r^ * Risk aversion * Assumes investors dislike risk and require higher rates of return to encourage them to hold riskier securities. * Risk premium * The difference between the return on a risky asset and a riskless asset, which serves as compensation for investors to hold riskier securities. * Portfolio expected return r^p The weighted average of the expected returns on the assets held in the portfolio * The weights being the percentage of the total portfolio invested in each asset * Diversification effects on a portfolio * ? p decreases as stocks added, because they would not be perfectly correlated with the existing portfolio. * Expected return of the portfolio would remain relatively constant. * Eventually the diversification benefits of adding more stocks dissipates (after about 10 stocks), and for large stock portfolios, ? p tends to converge to 20%. * Market risk vs. diversifiable risk Stand-alone risk = Market risk + Diversifiable risk * Market risk – portion of a security’s stand-alone risk that cannot be eliminated through diversification. Measured by beta. * Diversifiable risk – portion of a security’s stand-alone risk that can be eliminated through proper diversification. * Failure to diversify * If an investor chooses to hold a one-stock portfolio (doesn’t diversify), would the investor be compensated for the extra risk they bear? * NO! * Stand-alone risk is not important to a well-diversified investor. * Rational, risk-averse investors are concerned with ? , which is based upon market risk. * There can be only one price (the market return) for a given security. * No compensation should be earned for holding unnecessary, diversifiable risk. * Capital Asset Pricing Model (CAPM) * Model linking risk and required returns. CAPM suggests that there is a Security Market Line (SML) that states that a stock’s required return equals the risk-free return plus a risk premium that reflects the stock’s risk after diversification. * ri = rRF + (rM – rRF)bi * Primary conclusion: The relevant riskiness of a stock is its contribution to the riskiness of a well-diversified portfolio. Beta * Measures a stock’s market risk, and shows a stock’s volatility relative to the market. * Indicates how risky a stock is if the stock is held in a well-diversified portfolio. * Can the beta of a security be negative? * Yes, if the correlation between Stock i and the market is negative (i. e. , ? i,m 0). * If the correlation is negative, the regression line would slope downward, and the beta would be negative. * However, a negative beta is highly unlikely. * The Security Mark et Line (SML) (calculating required rates of return) * SML: ri = rRF + (rM – rRF)bi * ri = rRF + (RPM)bi Assume the yield curve is flat and that rRF = 5. 5% and RPM = 5. 0%. * Market risk premium * Additional return over the risk-free rate needed to compensate investors for assuming an average amount of risk. * Its size depends on the perceived risk of the stock market and investors’ degree of risk aversion. * Varies from year to year, but most estimates suggest that it ranges between 4% and 8% per year. * Portfolio beta * The beta of a portfolio is the weighted average of each of the stock’s betas. * bP = wHTbHT + wCollbColl * bP = 0. 5(1. 32) + 0. 5(-0. 87) * bP = 0. 225 * Portfolio required returns The required return of a portfolio is the weighted average of each of the stock’s required returns. * Or, using the portfolio’s beta, CAPM can be used to solve for expected return. * rRF + (rpm)(stocks beta) * Discounted dividend model * Value of a st ock is the present value of the future dividends expected to be generated by the stock. * * Valuing stock with constant growth * A stock whose dividends are expected to grow forever at a constant rate, g. * D1 = D0(1 + g)1 * D2 = D0(1 + g)2 * Dt = D0(1 + g)t * If g is constant, the discounted dividend formula converges to: * * Dividend yield vs. capital gains yield Dividend yield * = D1/P0 = $2. 12/$30. 29 = 7. 0% * Capital gains yield * = (P1 – P0)/P0 * = ($32. 10 – $30. 29)/$30. 29 = 6. 0% * Valuing stock with nonconstant growth * During nonconstant growth, dividend yield and capital gains yield are not constant, and capital gains yield ? g. * Corporate Valuation model * Also called the free cash flow method. Suggests the value of the entire firm equals the present value of the firm’s free cash flows. * Remember, free cash flow is the firm’s after-tax operating income less the net capital investment. * FCF = EBIT(1 – T) – Net capital inves tment * Terminal value Often preferred to the discounted dividend model, especially when considering number of firms that don’t pay dividends or when dividends are hard to forecast. * Similar to discounted dividend model, assumes at some point free cash flow will grow at a constant rate. * Terminal value (TVN) represents value of firm at the point that growth becomes constant. * Firm Multiple method * Analysts often use the following multiples to value stocks. * P/E * P/CF * P/Sales * EXAMPLE: Based on comparable firms, estimate the appropriate P/E. Multiply this by expected earnings to back out an estimate of the stock price. Preferred stock * Hybrid security. * Like bonds, preferred stockholders receive a fixed dividend that must be paid before dividends are paid to common stockholders. * However, companies can omit preferred dividend payments without fear of pushing the firm into bankruptcy. Chapter 10 * Sources of capital * Long-term capital * Long-term debt * Preferred S tock * Common Stock * Retained earnings * New common stock * Weighted average cost of capital (WACC) * WACC=Wdrd(1-T) + Wp rp + Wc rs * W’s refer to the firms capital structure weights * r’s refer to the cost of each component Before-tax vs. after-tax capital costs * Stockholders focus on A-T CFs. Therefore, we should focus on A-T capital costs, i. e. use A-T costs of capital in WACC. Only rd needs adjustment, because interest is tax deductible. * Historical costs vs. Marginal costs * The cost of capital is used primarily to make decisions that involve raising new capital. So, focus on today’s marginal costs (for WACC). * How weights are determined * Use accounting numbers or market value (book vs. market weights)? * Use actual numbers or target capital structure? * Cost of debt * WACC = wdrd(1 – T) + wprp + wcrs rd is the marginal cost of debt capital. * The yield to maturity on outstanding L-T debt is often used as a measure of rd. * Why tax-adjust; i. e. , why rd(1 – T)? * Cost of preferred stock * rp is the marginal cost of preferred stock, which is the return investors require on a firm’s preferred stock. * Preferred dividends are not tax-deductible, so no tax adjustments necessary. Just use nominal rp. * Our calculation ignores possible flotation costs. * The cost of preferred stock can be solved by using this formula: * rp= Dp/Pp * = $10/$111. 10 * = 9% * Cost of equity * Is there a cost of retained earnings? Earnings can be reinvested or paid out as dividends. * Investors could buy other securities, earn a return. * If earnings are retained, there is an opportunity cost (the return that stockholders could earn on alternative investments of equal risk). * Investors could buy similar stocks and earn rs. * Firm could repurchase its own stock and earn rs. * CAPM * CAPM: rs = rRF + (rM – rRF)b * DCF * DCF:rs = (D1/P0) + g * Bond-yield-plus-risk-premium * rs = rd + RP * Flotation costs * Flotation costs depend on the firm’s risk and the type of capital being raised. * Flotation costs are highest for common equity. However, since most firms issue equity infrequently, the per-project cost is fairly small. * We will frequently ignore flotation costs when calculating the WACC. * What affects WACC * Market conditions. * The firm’s capital structure and dividend policy. * The firm’s investment policy. Firms with riskier projects generally have a higher WACC. * The composite WACC reflects the risk of an average project undertaken by the firm. Therefore, the WACC only represents the â€Å"hurdle rate† for a typical project with average risk. * Different projects have different risks. The project’s WACC should be adjusted to reflect the project’s risk. How to cite Fin 331 Study Guide, Essay examples

New CGT Withholding Regime †Free Samples to Students

Question: Discuss about the New CGT Withholding Regime. Answer: Introduction: The taxation ruling of TR 2005/13 provides the explanation of the gift for the purpose of gift deductions under the provision Division 30 of the ITAA 1997[1]. The ruling provides the principle that is relevant in the determination of fact that whether the particular transfer of money or property may constitute gift. As evident from the current situation it can be seen that Johanna received a gift of $2,000 from her parents and under section 78 A of the ITAA 1936 concerning gifts states the situations in which gift are considered as deductible gift recipient which is not allowed as permissible deductions under division 30 of the ITAA 1997[2]. In order to determine whether the gifts shall be considered as the necessary to take into the considerations the entire set of circumstances that is necessary to take into the considerations the entire set of circumstances that surrounds the transfer and this might be included in the considerations of parties instead of the person giving the gift. In accordance with the present circumstances it can be stated that Section 78 A is not applicable in the present context of Johanna for deductions of genuine gifts that is made under the ordinary situations. Hence, the gifts will be considered as assessment and no deductions will be allowed to Johanna. The Taxation Rulings of TR 1999/6 is dealing with the implications of tax for flight rewards that is derived from the programs of customer faithfulness scheme following the verdict made in Payne v. FC of T (1996) 66 FCR[3]. According to the section 6-5 or 6-10 of the Income Tax Assessment Act 1997 flight rewards and package holidays will be considered as assessable income. At the time of ascertaining the implications of tax for rewards that is obtained from the supplier the flight reward will be assessed in the form of regular income under the section 6-5 of ITAA 1997 for the reason that only the taxpayer can include the non-cash benefit treated as taxable income and therefore will constitute an assessable income. In the present circumstances of Suka flight reward received from supplier for a free return trip to New Zealand shall be considered as the chargeable profits under section 6-5 or 6-10 of the Income Tax Assessment Act 1997. As held in FC of T v.Cooke and Sherden 80 ATC 4140 (1980) the court concluded that the flight reward will be considered as income in accordance with the ordinary concepts. It was determined by the court that the flight reward does not constitute cash or moneys significance and flight reward could not be exchangeable in cash. Therefore, for an employee flight reward would not be regarded as income. In accordance with Section 21 A of the ITAA 1936 it states that in ascertaining the proceeds generated by the taxpayer as a non-cash commercial benefit which is not convertible to cash must be assessed in the form of convertible to cash[4]. The issue in the present scenario of Suka represents a non-cash business benefits which is regarded under Taxation ruling of TR 2005/13. For a flight return to be considered as chargeable income to a business taxpayer, it should possess the character of the ordinary profits with the exemption that it should not be exchangeable in cash. Citing the reference of Scott v. FC of T(1966) 117 CLR 514, the high court stated its viewpoint that before bringing an amount within the paragraph 26 (e) of the ITAA 1936 or section 15-2 of the ITAA 1997 it will be considered as ordinary income. In the present context of Suka being a commercial taxpayer could have the flight return being treated in the form of regular income under section 6-5. This is because Suka is a business tax payer and the receipt of non-cash benefit will be treated in the form of income and hence it will be considered as the ordinary income. Reside test is used in determining the whether a person lives in Australia in accordance with the ordinary sense of the word Resides. From the current scenario of Bin it is evident that he intends to set up the business in Melbourne however to finalize the matters he had to return to Hong Kong in the month of March 2017[5]. According to the section 995-1 of the 1936 it can be stated that a person needs to satisfy the primary test of Resident or resident of Australia to be regarded as an Australian resident. As held in FC of T v. Applegate 79 ATC 4307 (1979) ATR 899 the place of abode forms the major determinant in determining the tax liability of an individual. According to the Taxation ruling of IT 2650 to ascertain the residential status it is necessary to perform the 183 day test or the domicile test to determine the residential status of Bin. According to the ruling of IT 2650 it is necessary to determine the actual length of stay of an individual in the overseas country[6]. From the present case study it is evident that Bin had not stayed in Australia continuously for a period of six months or more. The period and permanence of the Bins existence in Australia was not continuous in nature however it is evident that to consider the intention of the Bin of taking up home in Australia to make their home indefinitely. In conformity with the subsection 6 (1) of the Income Tax Assessment Act 1936 Bin will not be considered as the Australian resident because he did not resided in Australia constantly for a minimum period of six months and does not attracts tax liability for the year ended 30 June 2017[7]. Reference List: Anderson, Colin, Jennifer Dickfos, and Catherine Brown. "The Australian Taxation Office-what role does it play in anti-phoenix activity?."INSOLVENCY LAW JOURNAL24.2 (2016): 127-140. Barkoczy, Stephen. "Foundations of Taxation Law 2016."OUP Catalogue(2016). Braithwaite, Valerie, ed.Taxing democracy: Understanding tax avoidance and evasion. Routledge, 2017. James, Kieran. "The Australian Taxation Office perspective on work-related travel expense deductions for academics."International Journal of Critical Accounting8.5-6 (2016): 345-362. Newman, Sally. "The new CGT withholding regime: More than meets the eye."Proctor, The36.5 (2016): 18. ROBIN, H.AUSTRALIAN TAXATION LAW 2017. OXFORD University Press, 2017. Tran-Nam, Binh, and Michael Walpole. "Tax disputes, litigation costs and access to tax justice."eJournal of Tax Research14.2 (2016): 319. Woellner, R. H., et al.Australian Taxation Law Select: Legislation and Commentary 2016. Oxford University Press, 2016.