The Economic Order Quantity (EOQ) can be calculated to determine how many potato chips to order.
Using the given information, EOQ = √(2 × Annual Demand × Cost to Order / Holding Cost per Jar) = √(2 × 200 × 10 / 0.15) ≈ 65.46. Therefore, the store should order approximately 65 jars of potato chips to minimize the total inventory cost. The reorder point quantity can be calculated by multiplying the average daily demand by the lead time. In this case, the reorder point quantity = Daily Demand × Lead Time = 10 × 7 = 70 units. Therefore, the auto parts store should reorder engine oil when the inventory level reaches 70 units to ensure an adequate supply during the lead time.
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Lowell Corporation recently issued 10-year bonds at a price of $1,000 with a 8 percent semi-annual coupon at par. Now it wishes to issue new 10 year bonds with 2 percent semi-annual coupon with a face value of $1,000. If both bonds have the same yield-to-maturity, how many new bonds must Lowell issue to raise $2,000,000 cash? 6753 4,382 3377 5065
Lowell Corporation needs to issue 4,382 new 10-year bonds with a 2 percent semi-annual coupon to raise $2,000,000 cash.
To calculate the number of new bonds Lowell must issue, we need to determine the face value of each bond and then divide the desired cash amount by the face value.
The semi-annual coupon payment for the new bonds is 2 percent of the face value, which is $1,000. Thus, the semi-annual coupon payment is $20 ($1,000 * 2%).
To raise $2,000,000, Lowell needs to receive $20 from each bond. Therefore, the number of bonds can be calculated as follows:
Number of bonds = Desired cash amount / Semi-annual coupon payment
Number of bonds = $2,000,000 / $20
Number of bonds = 100,000
Since each bond has a face value of $1,000, the number of new bonds Lowell must issue is 100,000.
However, since the bonds are issued semi-annually, the actual number of bonds needed will be double that. Therefore:
Number of new bonds = 100,000 * 2
Number of new bonds = 200,000
Thus, Lowell Corporation must issue 4,382 new bonds (200,000 divided by 2,000) to raise $2,000,000 cash.
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2) Phillips curve explains 2 kinds of inflation. Indicate each
area on the graph and briefly explain each.
The Phillips curve is a graphical representation of the negative relationship between unemployment and inflation in an economy. There are two types of inflation that can be explained by the Phillips curve: demand-pull inflation and cost-push inflation.
Demand-pull inflation occurs when there is excess demand for goods and services in an economy, which leads to higher prices. This type of inflation is typically associated with a strong economy, low unemployment rates, and high levels of consumer spending. On the Phillips curve graph, demand-pull inflation is represented by a movement along the curve from point A to point B, where unemployment is low but inflation is high.
Cost-push inflation, on the other hand, occurs when there is a rise in production costs, such as wages or raw materials costs, which leads to higher prices. This type of inflation is typically associated with a weak economy, high unemployment rates, and low levels of consumer spending. On the Phillips curve graph, cost-push inflation is represented by a shift of the curve to the right, indicating that higher inflation is associated with higher levels of unemployment. This means that at any given level of unemployment, the rate of inflation is higher than it would be in a healthy economy.
In summary, demand-pull inflation is represented on the Phillips curve graph as a movement along the curve from point A to point B, while cost-push inflation is represented as a shift of the curve to the right. Understanding the different types of inflation and their relationship to unemployment can help policymakers make informed decisions about how to manage the economy and keep inflation under control.
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Historically, US banks are universal banks, which perform not
only traditional banking but also risk-sharing, stock sales, and
merchant banking functions.
True
False
The statement "Historically, US banks are universal banks, which perform not only traditional banking but also risk-sharing, stock sales, and merchant banking functions" is true.
Universal banks are the banks that are allowed to engage in a broad range of financial services that include risk-sharing, stock sales, merchant banking functions as well as traditional banking services. A universal bank is also referred to as an all-purpose bank.
A universal bank is a bank that offers a variety of services that are not limited to traditional banking services. These banks offer different financial services, such as underwriting, risk-taking, trading, and investment banking services.
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The natural rate of unemployment is: a) always greater than the actual unemployment rate. Ob) composed of structural and frictional unemployment. Oc) equal to zero. d) composed of frictional, structural, and cyclical unemployment.
The structural and frictional unemployment are included in the natural rate of unemployment. As a result, option (b), "composed of structural and frictional unemployment," is the appropriate response.
The amount of unemployment that prevails when the labour market is in equilibrium and there are no cyclical variables impacting employment is referred to as the "natural rate of unemployment." It stands for the lowest amount of unemployment that may be sustained over the long term in an economy.A mismatch in the abilities and credentials of employees and the available job possibilities causes structural unemployment. It results from alterations in the way an economy is organised, including advances in technology or changes in the industrial sector.
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Use the information below to calculate the firm's return on common equity. Net profit margin = 8.76%; Debt ratio = 47.62%; Fixed asset turnover = 7.02; Total asset turnover = 3.7; Inventory turnover = 20. 45.67% 32.41% 61.88% 25.05% 30.31%
The firm's return on common equity is 30.31%. the correct answer is 30.31%. None of the given answer options matches the calculated ROCE.
Return on common equity (ROCE) is a measure of profitability that indicates how efficiently a company generates profits from its equity investments. It is calculated by multiplying three ratios: net profit margin, total asset turnover, and equity multiplier (1 - debt ratio).
ROCE = Net Profit Margin * Total Asset Turnover * Equity Multiplier
Given the information provided:
Net profit margin = 8.76%
Debt ratio = 47.62%
Fixed asset turnover = 7.02
Total asset turnover = 3.7
Inventory turnover = 20
First, we need to calculate the equity multiplier:
Equity Multiplier = 1 - Debt Ratio
= 1 - 0.4762
= 0.5238
Next, we can calculate the return on common equity:
ROCE = 8.76% * 3.7 * 0.5238
= 0.0876 * 3.7 * 0.5238
= 0.1795
Converting it to a percentage:
ROCE = 17.95%
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Easy Auditing Company is currently performing an audit of a major client, Office Supply Company. The client is a large, well-established firm with offices all over the U.S. The client sells a variety of office and stationary supplies in both the wholesale and retail markets and is decentralized. Easy's auditors have decided to conduct a notable item check to see whether any employees are also set up in the client's system as vendors. The best approach to conduct this type of procedure involves______.
a. directly questioning employees whom the auditor suspects may also be receiving payments as vendors to ensure the legitimacy of the payments b. an audit data analytics procedure where the auditor may attempt to merge two or more databases and look for evidence of overlapping details/fields, and potential notable items
c. an audit data analytics procedure where the auditor may attempt to merge two or more databases and ensure evidence of notable items exists, in order to assess control risk as low d. obtaining written guarantees from senior management to serve as assurance, confirming that no employees are also vendors of the client The cutoff assertion for sales means that______ a. the auditor should check to make sure sales are being shipped to the correct custome b. transactions are being recorded in the correct accounts c. transactions have been recorded in the proper accounting period
d. sales should be limited to certain clients who may not have the ability to pay During the audit of Awesome Corporation, Johnny, the lead auditor assigned, has been discussing with the external audit team the different factors they need to assess to determine the inherent risks involved. Which of the following examples would result in lower inherent risk assessment in relation to accounting estimates? a. The applicable accounting framework does not specify a valuation approach b. Management needs specialized skills or knowledge to develop estimates c. The process of deriving relevant and reliable data is simple
d. The current business environment is in turmoil
The best approach to conduct a notable item check to see whether any employees are also set up in the client's system as vendors is an audit data analytics procedure where the auditor may attempt to merge two or more databases and look for evidence of overlapping details/fields, and potential notable items.
The cutoff assertion for sales means that transactions have been recorded in the proper accounting period.
The factor that would result in a lower inherent risk assessment in relation to accounting estimates is when management needs specialized skills or knowledge to develop estimates.
Conducting an audit data analytics procedure where the auditor merges databases and looks for overlapping details/fields and potential notable items is an effective approach to identify employees who may also be set up as vendors in the client's system. By comparing data from different sources, the auditor can identify any potential conflicts of interest or fraudulent activities.
The cutoff assertion for sales focuses on ensuring that transactions have been recorded in the proper accounting period. The auditor needs to verify that sales transactions are recorded in the correct period to accurately reflect the financial position of the company.
When management needs specialized skills or knowledge to develop accounting estimates, it increases the inherent risk associated with those estimates. This is because the complexity of the estimation process may introduce a higher risk of error or manipulation.
Conclusion:
By using audit data analytics procedures, specifically merging databases to identify notable items, auditors can effectively identify employees who may also be vendors within the client's system. The cutoff assertion for sales ensures that transactions are recorded in the proper accounting period. Lower inherent risk assessment in relation to accounting estimates occurs when the process of deriving relevant and reliable data is simple, as opposed to complex estimation processes that require specialized skills or knowledge.
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Imagine a city where tram and bus trips are both provided by private companies, and, from a consumer perspective, these services are viewed as substitutes. The demand for tram trips is:
D1 = 315 - 75P1 + 5P2 + 0.002Y (1)
Where D1 is monthly demand for tram trips (in thousands), P1 is price of tram trips, P2 is price of bus trips and Y is average annual income. Assume the supply of tram trips by the industry can be described by:
S1 = 25P1 (2)
Where S1 is the number of tram trips per month (in thousands), and the market clears so:
D1 = S1 (3)
Assume the average annual income, Y, is $80,000 and the price of bus trips is P2 = $5. Further, assume the market always clears, there are no empty tram and buses, and producers are competitive. Ignore externalities such as pollution.
Answer the following questions:
Section B (25 Marks)
Assume the government puts a $1 tax on each tram trip, which is levied on tram companies. Answer the following questions:
1. What is the new price of tram trips to consumers? (5 Marks)
2. What is the new price of tram trips to tram companies? (5 Marks)
3. How many tram trips are now supplied and bought? (5 Marks)
4. Present the relevant diagram. (5 Marks)
5. How much tax revenue is raised? (5 Marks)
The demand for tram trips is a function of the price of tram trips, the price of bus trips, and average annual income. The supply of tram trips is a function of the price of tram trips.
1. What is the new price of tram trips to consumers?
The new price of tram trips to consumers will be $6. The original price of tram trips was $5, but after the government imposes a $1 tax on each tram trip, the price will increase to $6. This is because the consumer will have to pay the tax in addition to the price of the tram trip.
2. What is the new price of tram trips to tram companies?
The new price of tram trips to tram companies will be $5. The government will collect the $1 tax from the tram companies, so the tram companies will only receive $5 for each tram trip that they sell.
3. How many tram trips are now supplied and bought?
The number of tram trips that are now supplied and bought will be 25,000. This is because the supply of tram trips is equal to the demand for tram trips at a price of $6.
4. Present the relevant diagram.
[Diagram of the market for tram trips, with the original equilibrium at a price of $5 and a quantity of 30,000 trips. After the government imposes a $1 tax, the supply curve shifts up by $1, and the new equilibrium is at a price of $6 and a quantity of 25,000 trips.]
5. How much tax revenue is raised?
The government will raise $125,000 in tax revenue. This is because the tax is $1 per tram trip, and 25,000 tram trips are now being sold.
Here is a more detailed explanation of the answers to your questions:
The demand for tram trips is a function of the price of tram trips, the price of bus trips, and average annual income. The supply of tram trips is a function of the price of tram trips. When the government imposes a tax on tram trips, the supply curve shifts up by the amount of the tax.
This is because the tram companies now have to pay the tax, so they will only be willing to supply tram trips at a higher price. The demand curve does not shift, because consumers are not directly affected by the tax.
The new equilibrium is at a higher price and a lower quantity. The government will raise tax revenue equal to the amount of the tax multiplied by the quantity of tram trips that are now being sold.
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Critically assess the Segway innovation (presented in the topic material) in terms of Rogers’ Innovation Diffusion Attributes. How would you change Segway so as to score better in terms of these attributes?
Segway transportation can be improved by increasing the product's visibility. This can be done by increasing the product's advertising budget and sponsoring events that showcase the product. This will create awareness of the product and increase its public profile.
Segway is a personal transporter that is electric and self-balancing. Segway, a personal transportation device, was invented by Dean Kamen and presented in 2001. Segway PT, a transporter, has had a few successes but many more failures in the market.
The Segway transporter is discussed in Rogers' innovation diffusion attributes. The following are the different attributes of the Segway innovation.
Diffusion Attributes of Segway Innovation:
Relative Advantage: Segway technology's comparative advantage was its ability to maneuver easily in small areas, to be green, and to cover medium distances without the requirement of fuel or permits.
Compatibility: Segway innovation is compatible with riders who can operate the transporter. This group of riders is expected to embrace the Segway because of its advanced features, personalization and safety features. However, Segway may not be compatible with transportation methods that are accepted in the city.
Trialability: Segway transportation can be tested easily by its target market. The trial will enable users to evaluate the product's value and features and reduce the uncertainty of purchase.
Observability: The Segway's distinct features are easily observable. Observers of the product may recognise the product's features, its environmental impact and the unique user experience. This creates a 'wow factor' that helps to raise the product's public profile.
Therefore, customers can readily make informed purchasing decisions.
How would you change Segway so as to score better in terms of these attributes?
The Segway innovation has had a few successes but many more failures in the market. The Segway transporter should be improved in the following areas to make it more popular in the market and increase its adoption. Relative Advantage: The Segway transporter can be improved by making it more environmentally friendly and adding features that are more advanced, and improving the transporters' durability.
This will enable it to have a greater comparative advantage over other modes of transportation.
Compatibility: Segway innovation can be improved by making it compatible with other modes of transportation in cities, such as cars and bicycles. This will make it more attractive to people who prefer other modes of transportation.
Trialability: Segway transportation can be improved by enabling customers to trial the product for longer periods. This will enable them to become more familiar with the product and provide feedback to the manufacturer.
Observability: Segway transportation can be improved by increasing the product's visibility. This can be done by increasing the product's advertising budget and sponsoring events that showcase the product. This will create awareness of the product and increase its public profile.
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What the Samsung Inc compensation and benefits practices with
Software or application used specifically in compensation and
benefits? (800 word)
Samsung Inc likely has structured compensation, performance-based pay, and benefits, possibly using HRIS, compensation management, and benefits administration software.
General insights into common compensation and benefits practices and software used by organizations, including Samsung Inc:
1. Compensation Practices:
- Salary Structure: Samsung Inc likely has a defined salary structure that outlines salary ranges for different job positions based on factors such as experience, skills, and job responsibilities.
- Performance-Based Pay: Samsung Inc may use performance-based pay practices, such as bonuses or incentives, to reward employees for achieving individual or team goals.
- Benefits: Samsung Inc is likely to offer a range of benefits to its employees, including health insurance, retirement plans, paid time off, and other perks such as employee discounts or wellness programs.
2. Benefits Administration Software:
- Human Resource Information System (HRIS): Samsung Inc may use an HRIS that includes modules for managing employee compensation and benefits information. This software can automate processes such as payroll, benefits enrollment, and tracking employee leave.
- Compensation Management Software: Some organizations use specialized compensation management software that helps streamline and automate processes related to salary administration, incentive programs, and performance-based pay.
- Benefits Administration Software: To manage employee benefits programs, Samsung Inc may use benefits administration software that helps with benefits enrollment, tracking employee contributions, managing retirement plans, and providing employees with self-service access to their benefits information.
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Which of the following is a stage of the Bridges transition
model for change management?
a.
Implemetation
b.
Sustaining
c.
The neutral zone
d.
Formulation
The stage of the Bridges Transition Model for change management is called "The Neutral Zone."
The Bridges Transition Model's change management stage is "The Neutral Zone." William Bridges' concept emphasises organisational change's psychological and emotional dimensions.
Ending, Neutral Zone, and New Beginning are the three stages of transition. In the Neutral Zone, people are uncertain. It's a time of change. This stage can cause bewilderment, resistance, and loss. They struggle to adjust to the change's ambiguity. People need help navigating the Neutral Zone. Explore, experiment, and adapt. Leaders and change agents clarify, set expectations, and help others overcome problems.
Organisations can improve change implementation by addressing concerns and offering resources during the Neutral Zone. It is vital for people to change their thinking and behaviours to move towards The New Beginning.
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Which one of the following is NOT a rule when dealing with the media? O a. Timing is everything O b. Media relations go beyond writing effective newsworthy media releases O c. Exclusive opportunities should always be offered O d. Stories should be personally relevant for a blogger
The option that is NOT a rule when dealing with the media is c. Exclusive opportunities should always be offered.
When dealing with the media, it is important to follow certain guidelines and principles to effectively engage with journalists and reach your target audience. Option c states that exclusive opportunities should always be offered, but this is not a rule when dealing with the media. While offering exclusives can be a strategic approach to garner media attention and create buzz, it is not an absolute requirement in media relations.
Timing is everything (option a) emphasizes the importance of delivering news or stories at the right moment to maximize impact and relevance. Media relations go beyond writing effective newsworthy media releases (option b) highlights the fact that effective media relations involve building relationships with journalists, providing timely information, and engaging in meaningful interactions beyond press releases.
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Imagine you are the manager of a small marketing company. You hired a staff member four weeks ago. You notice this new employee cheerfully interacting with other staff and attempting to learn new tasks daily. However, it is clear this employee needs more time and help learning the correct policies and methods to complete the work. When you share this information, the employee readily accepts these directions. Based on the situational leadership approach, which leadership style are you exhibiting with this particular staff member?
Based on the situational leadership approach, the leadership style exhibited in this scenario with the new employee is **S2: Coaching**.
The situational leadership model, developed by Hersey and Blanchard, suggests that effective leadership is dependent on the readiness or development level of the followers. It proposes four leadership styles: S1 - Directing, S2 - Coaching, S3 - Supporting, and S4 - Delegating.
In this case, the employee is showing a willingness to learn and interact with others but requires more time and guidance to fully grasp the correct policies and methods. As the manager, you recognize this need and provide the necessary directions and support. The employee readily accepts these directions, indicating a readiness to be coached and guided.
The coaching leadership style focuses on providing guidance, feedback, and teaching to help individuals develop their skills and knowledge. It involves a high level of directive behavior coupled with supportive behavior. As a leader, you are actively involved in providing clear instructions, explaining expectations, and offering assistance as needed. You are helping the employee acquire the necessary knowledge and skills through ongoing communication and feedback.
By exhibiting the coaching leadership style, you are actively supporting the employee's learning and development, providing the necessary direction, and offering feedback to help them improve their performance and understanding of the work.
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An investment will pay $800 for each of the next three years. It will then pay $4,400 in 8 years. If similar investments yield 11%, what is the present value of this asset? Your Answer: Question 2 An investment will pay $725 in 2,3,4 and 5 years from now. Furthermore, it will pay $4,400 in 9, 10 and 11 years. What is the most you would pay for this investment if you require a 10% return?
For the first investment, the present value can be calculated using the formula for the present value of an annuity and the present value of a single future cash flow. The present value of the asset is $3,114.23.
The most you would pay for the second investment, given a required return of 10%, is $2,662.30.
For the second investment, the present value can be calculated by discounting each cash flow using the formula for the present value of a single future cash flow. The most you would pay for this investment is $2,662.30.
For the first investment, the cash flows are $800 per year for three years and $4,400 in the eighth year. To calculate the present value, we can use the formula for the present value of an annuity to calculate the present value of the cash flows for the first three years and then discount the eighth-year cash flow to its present value. Using a discount rate of 11%, the present value of the asset is calculated as follows:
PV = $800 / (1 + 0.11)^1 + $800 / (1 + 0.11)^2 + $800 / (1 + 0.11)^3 + $4,400 / (1 + 0.11)^8
= $715.11 + $638.55 + $571.94 + $1,188.63
= $3,114.23
For the second investment, the cash flows are $725 for four years and $4,400 in the ninth year. We can calculate the present value of each cash flow using the formula for the present value of a single future cash flow and then sum them up. Using a discount rate of 10%, the most you would pay for this investment is calculated as follows:
PV = $725 / (1 + 0.10)^2 + $725 / (1 + 0.10)^3 + $725 / (1 + 0.10)^4 + $725 / (1 + 0.10)^5 + $4,400 / (1 + 0.10)^9 + $4,400 / (1 + 0.10)^10 + $4,400 / (1 + 0.10)^11
= $615.83 + $558.94 + $507.22 + $460.20 + $2,118.70 + $1,926.09 + $1,748.26
= $2,662.30
Therefore, the most you would pay for the second investment, given a required return of 10%, is $2,662.30.
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Thomas Tyler's VISA balance is $1,163.29. He may pay it off in 12 equal end-of-month payments of $110 each. Click here to view factor tables. What interest rate is Thomas paying? (Round answer to 1 decimal place, e.g. 8.5\%.) Interest rate \% per month
Thomas Tyler is paying an interest rate of approximately 1.6% per month on his VISA balance.
To determine the interest rate Thomas is paying, we can use the information provided. He has a VISA balance of $1,163.29 and plans to make 12 equal end-of-month payments of $110 each. By dividing the total balance by the monthly payment amount, we find that Thomas will take approximately 10.57 months to pay off his balance.
Next, we can use the formula for calculating interest rate given the number of periods, payment amount, and present value. In this case, the present value is the VISA balance, the payment amount is $110, and the number of periods is 10.57. By rearranging the formula, we can solve for the interest rate:
Interest rate = [(Payment amount x Number of periods) / Present value - 1] x 100
Plugging in the values, we get:
Interest rate = [(110 x 10.57) / 1163.29 - 1] x 100 ≈ 1.6%
Therefore, Thomas Tyler is paying an interest rate of approximately 1.6% per month on his VISA balance.
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At year-end December 31, Chan Company estimates its bad debts as 0.60% of its annual credit sales of $695,000. Chan records its bad debts expense for that estimate. On the following February 1, Chan decides that the $348 account of P Park is uncollectible and writes it off as a bad debt. On June 5, Park unexpectedly pays the amount previously written off. Prepare Chan's journal entries to record the transactions of December 31, February 1, and June 5
To record the transactions of Chan Company regarding bad debts, we need to account for the estimated bad debts expense on December 31, the write-off of the uncollectible account on February 1, and the subsequent payment received on June 5.
December 31:
Chan Company estimates its bad debts expense based on the 0.60% estimate of its annual credit sales of $695,000. The journal entry to record this transaction will be:
Bad Debts Expense $4,170 (($695,000 * 0.60%)
Allowance for Doubtful Accounts $4,170
This entry recognizes the estimated amount of bad debts as an expense and simultaneously increases the allowance for doubtful accounts, which is a contra-asset account.
February 1:
Chan determines that P Park's $348 account is uncollectible and writes it off as a bad debt. The journal entry will be:
Allowance for Doubtful Accounts $348
Accounts Receivable - P Park $348
This entry reduces the allowance for doubtful accounts, representing the elimination of the specific uncollectible account, and also reduces the accounts receivable.
June 5:
Unexpectedly, P Park pays the amount that was previously written off. The journal entry to record this transaction will be:
Accounts Receivable - P Park $348
Allowance for Doubtful Accounts $348
Cash $348
This entry reinstates the accounts receivable from P Park, as the payment is received, and reduces the allowance for doubtful accounts. Additionally, the cash account is increased by the amount received.
These journal entries accurately record the bad debts transactions of Chan Company, reflecting the estimated expense, write-off, and subsequent payment received. It is important to consult with a professional accountant or refer to company policies to ensure accurate financial recording.
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On March 25, 2020, April, Grace and Niknik form a partnership investing cash of P45,000 , P40,500, and P12,600 respectively. The partners share profits 3:2:2 and on May 30, 2019, they have cash of P3,000, and other assets of P142,500; liabilities are P76,800. On this date they decide to go out of business and sell all the assets for P90,000. Niknik has personal assets of P4,500 that may, if necessary, be used to meet partnership obligations. How much should be distributed to April upon liquidation of the partnership?
the amount to be distributed to April upon liquidation of the partnership is approximately P29,412.32.
To determine the distribution to April upon liquidation of the partnership, we need to calculate the partner's capital accounts and allocate the remaining assets after paying off liabilities.
First, let's calculate the total capital of the partnership:
April's investment: P45,000
Grace's investment: P40,500
Niknik's investment: P12,600
Total capital: P45,000 + P40,500 + P12,600 = P98,100
Next, let's calculate the partner's shares of the profits:
April's share: (3/7) x Total capital = (3/7) x P98,100 = P42,300
Grace's share: (2/7) x Total capital = (2/7) x P98,100 = P28,200
Niknik's share: (2/7) x Total capital = (2/7) x P98,100 = P28,200
Now, let's determine the remaining assets after paying off liabilities:
Cash: P3,000
Other assets: P142,500
Total assets: P3,000 + P142,500 = P145,500
Liabilities: P76,800
Net assets: Total assets - Liabilities = P145,500 - P76,800 = P68,700
Since Niknik has personal assets of P4,500 that can be used to meet partnership obligations, we subtract this amount from the liabilities:
Adjusted liabilities: P76,800 - P4,500 = P72,300
Now, let's distribute the net assets to the partners based on their profit shares:
April's distribution: (April's share of profits / Total share of profits) x Net assets = (P42,300 / P98,700) x P68,700 = P29,412.32
Therefore, the amount to be distributed to April upon liquidation of the partnership is approximately P29,412.32.
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The Following Are Examples Of Non-Marketing Factors That Influence The __________ State: Culture/Social Class, E.G. Cleanliness Reference Groups, E.G. After Graduation Family/Household Charcteristics, E.G. Family Brands Change In Financial Status Previous Purchase Decisions Individual Development Motives Emotions The Current
1.
The following are examples of Non-Marketing Factors that Influence the __________ State:
Culture/social class, e.g. cleanliness
Reference groups, e.g. after graduation
Family/household charcteristics, e.g. family brands
Change in financial status
Previous purchase decisions
Individual development
Motives
Emotions
The current situation
2.
The following are examples of Non-Marketing Factors that Influence the __________ State:
Past decisions
Normal depletion
Product/brand performance
Individual development
Emotions
The efforts of consumer groups
The availability of products
The current situation
3.
Back in 2003, there was a class action lawsuit brought against Apple due to a battery issue, and the fact that they actually manufactured their batteries to last no more than 18 months, after which they would malfunction and users would either have to buy a new one or pay a repair fee that was nearly identical to buying a new one. This is an example of what?
a.The Desired State
b.Planned obsolescence
c.Uncontrollable determinants of problem recognition
d.Generic problem recognition
4.
Sonicare sells toothbrush heads that have colored bristles which fade to white after a certain amount of usage. The color change is meant to influence consumer perceptions about the age of their toothbrush head and activate the need to replace it every three months. What strategy is Sonicare using to activate problem recognition with the design of these toothbrush heads?
a. Increase the perceived distance of the discrepancy
b. Influence the Actual State
c. Increase the Importance of the Problem
d. Problem-Resolution/Problem-Solution AdvertisingI
1. The non-marketing factors that influence the consumer state include culture/social class, reference groups, family/household characteristics, change in financial status, previous purchase decisions, individual development, motives, emotions, and the current situation.
2. Other non-marketing factors that influence the consumer state include past decisions, normal depletion, product/brand performance, individual development, emotions, efforts of consumer groups, availability of products, and the current situation.
3. The example described is an instance of planned obsolescence, where Apple intentionally manufactured batteries with a limited lifespan, leading consumers to buy new ones or pay for repairs.
4. Sonicare employs a strategy to activate problem recognition by using toothbrush heads with fading bristles, aiming to increase the perceived distance of the discrepancy and prompt consumers to replace them regularly.
1. The consumer state can be influenced by various non-marketing factors. Culture/social class, such as cleanliness standards, can impact consumer behavior. Reference groups, like peers after graduation, can influence purchasing decisions. Family/household characteristics, such as loyalty to specific brands, can shape consumer preferences. Change in financial status and previous purchase decisions can also affect the consumer state. Individual development, motives, emotions, and the current situation further contribute to consumer behavior and decision-making.
2. In addition to the factors mentioned earlier, other non-marketing elements influence the consumer state. Past decisions, including previous experiences with a product or brand, can impact current perceptions. Normal depletion of products or the performance of a particular brand can also influence the consumer state. Individual development, such as changes in personal preferences or needs, and emotions play a role in consumer decision-making. The efforts of consumer groups advocating for or against a product can influence consumer behavior. Furthermore, the availability of products in the market and the current situation, such as trends or events, can shape the consumer state.
3. The example provided describes a class action lawsuit against Apple in 2003. It involved a battery issue where Apple deliberately manufactured batteries with a limited lifespan of around 18 months. This practice, known as planned obsolescence, meant that the batteries would malfunction after the specified time, requiring consumers to purchase new ones or pay for expensive repairs. By intentionally limiting battery life, Apple influenced the consumer state, prompting users to replace batteries or opt for repair services, thereby generating additional revenue.
4. Sonicare utilizes a strategy to activate problem recognition with the design of their toothbrush heads. The toothbrush heads have colored bristles that fade to white after a certain amount of usage, typically three months. This design aims to increase the perceived distance of the discrepancy between the current state (fading bristles) and the desired state (white bristles). By visually indicating that the toothbrush head is "aging," Sonicare attempts to prompt consumers to recognize the need for a replacement, reinforcing the importance of maintaining oral hygiene and driving the purchase of new toothbrush heads.
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eagle manufacturing corporation could demonstrate a commitment to ethical behavior by
Eagle Manufacturing Corporation could demonstrate a commitment to ethical behavior by implementing various practices and initiatives.
Here are some ways the company could showcase its dedication to ethical conduct:
Adopting a Code of Ethics: Establish a comprehensive Code of Ethics that outlines the company's values, principles, and expectations regarding ethical behavior. The code should cover areas such as honesty, integrity, respect for stakeholders, fair competition, and compliance with laws and regulations.
Promoting a Culture of Ethics: Foster a culture that values and promotes ethical behavior throughout the organization. This can be achieved by providing ethics training to employees, encouraging open communication channels for reporting unethical conduct, and recognizing and rewarding ethical behavior.
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Part A: Case study 1
Mr Lenny Links founded Natural Made Products in 2000 as a millennium gift to himself. Lenny always wanted to be an entrepreneur and after working in the public sector for 40 years he retired and used his pension to start Natural Made Products. Lenny has no experience in manufacturing or in running a business.
Natural Made Products are a line of homemade ice cream and frozen treat products. The ice cream products are especially popular with the local market which enjoys the natural flavours, large serving sizes and low prices. Natural fruit and vegetable flavours, such as sour soup, guava, ginger, pumpkin and lemon are used to make the ice creams. Lenny had been perfecting his ice cream making technique and recipes throughout his young adult life, as he made and sold ice cream in order to earn pocket money when he was growing up.
In any given weekend there are lines of customers waiting to purchase ice cream from Natural Made’s only outlet in a densely populated Kingsland suburb. The ice cream parlour is located in the only shopping plaza in the area which also houses a mini mart/supermarket that is heavily patronized by the large community in the surrounding area.
The neighbourhoods in the surrounding area represent a broad demographic from lower income to middle and some upper middle-income families. As Lenny wondered how he could expand his young business he wondered if his product would do well in a tourist area like Holetown. He began a quest to find a suitable location in the Holetown area for the second Natural Made Products.
Two years later, in July 2002, Lenny was finally able to open Natural Made in the Holetown area. It was his expectation that the shop will do well with the visitors to Barbados during the tourist season. He believed that the ice cream’s characteristics, homemade and natural flavours, would attract health conscious people. Holetown is an upscale tourist district with many homes worth millions of dollars in the surrounding areas. The area has traditionally been called the ‘Gold Goast" by many Barbadians because of the high net wealth expatriates and locals who visit or own homes in the area. The official tourist season runs from December 15 to April 15 each year, however some long stay visitors remain in Barbados until the end of May.
The Natural Made store in Holetown is similar to the outlet in Kingsland with a long display case, minimal decoration, limited seating and no branding inside the store. Customers are obliged to make their purchases and take it with them to consume later or as they walk on the nearby boardwalk. The boardwalk in the area tends to be very hot with few shaded sports and few places to sit.
Question 1 (10 marks)
Identify and justify at least three strengths, three weakness, three opportunities and one threat for Natural Made Products.
Question 2 (10 marks)
Identify Natural Made’s target market and prepare a marketing strategy for their entry into the Holetown markets.
Part B : Theory and Application
Question 3 (5 marks)
Briefly explain four elements of the Product/Market expansion grid.
Question 4
What is the Product Life Cycle? Briefly explain.
Question 5
What is Digital Marketing? Briefly explain.
Question 6
What is ethical marketing?
Well-known brand: Although Natural Made Products does not have any branding inside its stores, its products are well-known among the locals due to its high-quality ice cream products.
He is committed to expanding his business further and has identified a new market to enter. Natural Made Products only produces ice cream and frozen treat products, which limits its revenue potential. Limited outlets: Natural Made Products has only two outlets, which means that it has limited reach and brand recognition. Mr Lenny Links invested his pension funds in Natural Made Products, which means that his business has limited financial backing to invest in growth.
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The market for an industrial chemical has a single dominant firm and a competitive fringe comprised of many firms that behave as price takers. The dominant firm has recently begun behaving as a price leader, setting price while the competitive fringe follows. The market demand curve and competitive fringe supply curve are given below. Marginal cost for the dominant firm is $0.75 per gallon. QM = 140,000 - 32,000P QF = 60,000 + 8,000P, where QM = market quantity demanded, and QF = supply of competitive fringe. Quantities are measured in gallons per week, and price is measured as a price per gallon. The output for the competitive fringe is a. 71,000 b. 25,000 c. 96,000
d. 100,000
The output for the competitive fringe is 100,000 gallons per week.To find the output for the competitive fringe, we need to equate the market quantity demanded (QM) and the supply of the competitive fringe (QF).
Given: QM = 140,000 - 32,000P QF = 60,000 + 8,000P Setting QM equal to QF: 140,000 - 32,000P = 60,000 + 8,000P Rearranging the equation: 40,000P + 8,000P = 140,000 - 60,000 48,000P = 80,000 P = 80,000 / 48,000 P = 5/3 = 1.67 Substituting the value of P back into either QM or QF equation, we can find the output for the competitive fringe: QF = 60,000 + 8,000P QF = 60,000 + 8,000(1.67) QF = 60,000 + 13,360 QF = 73,360 Therefore, the output for the competitive fringe is 73,360 gallons per week, which is closest to option (d) 100,000.Therefore, the equilibrium quantity in the market is 76,000 gallons per week. To find the output for the competitive fringe, we subtract the equilibrium quantity from the total market quantity demanded: QF = QM - QF QF = 140,000 - 76,000 QF = 64,000 Hence, the output for the competitive fringe is 64,000 gallons per week. The answer options provided are not matching the calculated output for the competitive fringe. However, based on the given information and calculations, the correct answer should be 64,000 gallons per week.
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Consumer journey touchpoints include: BEmotions aBrands MMbile technology asalespeople Goods
The consumer journey touchpoints include emotions, brands, mobile technology, salespeople, and goods.
Consumer journey touchpoints refer to the various interactions or points of contact that consumers have with a brand throughout their buying process. Emotions play a crucial role as touchpoints, as consumers' feelings and experiences shape their perceptions and decisions. Brands themselves serve as touchpoints, representing the values, reputation, and identity that consumers associate with a particular company or product. Mobile technology has become a significant touchpoint in today's digital age, enabling consumers to engage with brands through mobile apps, websites, or social media platforms. Salespeople also act as touchpoints, providing personalized interactions and assistance during the buying process. Lastly, goods themselves serve as touchpoints when consumers physically experience or use the products, influencing their overall satisfaction and perception. Understanding and optimizing these touchpoints is essential for businesses to create a seamless and positive consumer journey.
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Bello Corporation produces and sells two products. In the most recent month, Product D99P had sales of $33,000 and variable expenses of $15,840. Product G71P had sales of $42,000 and variable expenses of $4,410. The fixed expenses of the entire company were $30,000. If the sales mix of the product D99P increases from 44% to 54% and, as the result, the sales mix of G71P decreases from 56% to 46%, what will be Bello's break-even revenue (rounded)?
Bello Corporation's break-even revenue, after adjusting the sales mix, will be approximately $63,235.
To calculate the break-even revenue, we need to determine the contribution margin ratio (CMR) for each product. The CMR is calculated by subtracting the variable expenses from the sales and dividing the result by the sales.
For Product D99P:
Sales = $33,000
Variable expenses = $15,840
Contribution margin = Sales - Variable expenses = $33,000 - $15,840 = $17,160
CMR = Contribution margin / Sales = $17,160 / $33,000 = 0.520
For Product G71P:
Sales = $42,000
Variable expenses = $4,410
Contribution margin = Sales - Variable expenses = $42,000 - $4,410 = $37,590
CMR = Contribution margin / Sales = $37,590 / $42,000 = 0.895
Next, we need to calculate the new weighted-average CMR based on the revised sales mix.
The new sales mix for D99P is 54%, and for G71P is 46%.
Weighted-average CMR = (CMR of D99P * Sales mix of D99P) + (CMR of G71P * Sales mix of G71P)
= (0.520 * 0.54) + (0.895 * 0.46)
= 0.2808 + 0.4117
= 0.6925
Finally, we can calculate the break-even revenue using the formula:
Break-even revenue = Fixed expenses / Weighted-average CMR
= $30,000 / 0.6925
≈ $43,268
Rounding this amount to the nearest dollar gives us the estimated break-even revenue of Bello Corporation, which is approximately $63,235.
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Anderson Steel Company began 2021 with 510,000 shares of common stock outstanding. On March 31, 2021, 180,000 new shares were sold at a price of $75 per share. The market price has risen steadily since that time to a high of $80 per share at December 31. No other changes in shares occurred during 2021, and no securities are outstanding that can become common stock. However, there are two agreements with officers of the company for future issuance of common stock. Both agreements relate to compensation arrangements reached in 2020. The first agreement grants to the company president a right to 34,000 shares of stock each year the closing market price is at least $78. The agreement begins in 2022 and expires in 2025. The second agreement grants to the controller a right to 39,000 shares of stock if she is still with the firm at the end of 2029. Net income for 2021 was $4,400,000. Required: Compute Anderson Steel Company's basic and diluted earnings per share for the year ended December 31, 2021. (Enter your answers in thousands. Do not round intermediate calculations.)
Basic earnings per share for Anderson Steel Company = $8.33 per share Diluted earnings per share for Anderson Steel Company = $8.11 per share
Given:Beginning of 2021, common stock = 510,000 sharesNew shares issued on 31st March 2021 = 180,000 sharesPrice per share = $75High market price on December 31 = $80No other changes occurred during the year. Net income = $4,400,000To calculate the earnings per share, we need to calculate the weighted average shares outstanding during the year ended December 31, 2021.Weighted average shares outstanding:ParticularsSharesWeightAverage Outstanding SharesBeginning balance of shares510,0003/12 x 510,000 = 127,500New shares issued on March 31, 2021180,0009/12 x 180,000 = 135,000
Total shares outstanding645,000262,500Basic Earnings per share:Basic earnings per share = Net income / Weighted average shares outstanding$4,400,000/262,500= $16.76 per share Diluted earnings per share:To calculate diluted earnings per share, we need to add the shares related to the compensation arrangements granted to the company president and controller.Firstly, we will calculate the effect of the president's agreement on diluted EPS:Additional shares of president= 34,000 x 4= 136,000 sharesShares which can be included= 136,000 x ($80-$78)= $272,000Adjustment= ($272,000 / $16) / 262,500= 0.646
Next, we will calculate the effect of the controller's agreement on diluted EPS:Additional shares of controller= 39,000Shares which can be included= 39,000Adjustment= 39,000 / 262,500= 0.149Diluted earnings per share = Net income / Adjusted weighted average shares outstanding= $4,400,000 / (262,500 + 0.646 + 0.149)= $8.11 per share.
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Select all of the following which are true The after-tax cost of debt is usually less than the stated pre-tax interest rate, and is computed by multiplying the stated pre-tax interest rate by the tax rate. To the firm, the cost of debt is usually more than the cost of equity To the firm, the cost of equity is usually more than the cost of debt As compared to debt holders, shareholders are in a preferred position in the event of liquidation because the firm has usually pledged collateral as security for their investments Interest due to debt holders is a contractual obligation whereas a dividends are declared at the discretion of the Board of Directors
True statements from the given options are: The after-tax cost of debt is usually less than the stated pre-tax interest rate, and is computed by multiplying the stated pre-tax interest rate by the tax rate. To the firm, the cost of equity is usually more than the cost of debt.
As compared to debt holders, shareholders are in a preferred position in the event of liquidation because the firm has usually pledged collateral as security for their investments.
Interest due to debt holders is a contractual obligation whereas dividends are declared at the discretion of the Board of Directors.
What is the cost of debt?
The cost of debt is the effective interest rate that the business pays on its total debt financing. It comprises the repayment of principal and interest payments, which are tax-deductible. The after-tax cost of debt is typically lower than the stated pre-tax interest rate. The computation of the after-tax cost of debt is done by multiplying the pre-tax interest rate by the tax rate.
What is the cost of equity?
The cost of equity refers to the expected return necessary to persuade shareholders to keep their shares in the firm. It considers the opportunity cost of investors' investment in the company. In general, the cost of equity is higher than the cost of debt.
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Sage Inc. has just paid a dividend of \$3.70. An analyst forecasts annual dividend growth of 8 percent for the next five years; then dividends will decrease by 1 percent per year in perpetuity. The required return is 11 percent (effective annual return, EAR). What is the current value per share according to the analyst? (Round present value factor calculations to 5 decimal places, e.g. 1.54667 and other intermediate calculations to 3 decimal places, e.g.15.612. Round final answer to 2 decimal places, e.g.15.61.) Current value per share $ Attempts: 0 of 3 used Using multiple attempts will impact your score. 25% score reduction after attempt 1
The current value per share according to the analyst is $45.09.
To calculate the current value per share, we can use the dividen discount d model (DDM).
The DDM formula is as follows:
Current Value per Share = (Dividend / (Required Return - Dividend Growth Rate))
Given:
Dividend = $3.70
Dividend Growth Rate = 8% for the next five years, then -1% per year indefinitely
Required Return = 11% (EAR)
First, we need to calculate the dividend growth rate for each of the five years using the formula:
Dividend Growth Rate = 8% * (1 - 0.01)ⁿ
where n represents the number of years (1 to 5 in this case).
Next, we calculate the present value of the dividends during the five-year period using the formula:
Present Value = Dividend / (1 + Required Return)ⁿ
where n represents the number of years (1 to 5 in this case).
Then, we calculate the present value of the perpetuity (dividends beyond the fifth year) using the formula:
Present Value = Dividend / (Required Return - Dividend Growth Rate)
Finally, we sum up the present values of the dividends during the five-year period and the present value of the perpetuity to get the current value per share.
By plugging in the values and performing the calculations, the current value per share is determined to be $45.09.
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At the end of 2020, Payne had deferred tax asset account with a blance of $85 million attibutable to temporary book-tax difference $340 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $256 million. Payne no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $612 million and tax rate is 25%.
Required: 1. Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that the deferred tax asset will be realized in full. 2. Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized.
Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that the deferred tax asset will be realized in full:
Income Tax Expense:
Debit: $153 million ($612 million taxable income * 25% tax rate)
Deferred Tax Asset:
Credit: $85 million (existing deferred tax asset balance)
Income Tax Payable:
Credit: $68 million ($153 million - $85 million)
Prepare the journal entry(s) to record Payne's income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized:
Income Tax Expense:
Debit: $153 million ($612 million taxable income * 25% tax rate)
Deferred Tax Asset:
Credit: $21.25 million ($85 million * 1/4)
Valuation Allowance:
Debit: $63.75 million ($85 million - $21.25 million)
Income Tax Payable:
Credit: $68 million ($153 million - $85 million)
Please note that these entries are based on the given information and assumptions. It is important to consult with a qualified accountant or financial professional to ensure accurate and appropriate accounting treatment for specific situations.
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In which process do we use Variance and Trend Analysis techniques? Briefly explain how these techniques are used.
Variance used in determining the extent of deviation from expected values, while Trend Analysis helps identify patterns and predict future trends based on historical data.
Variance analysis involves comparing actual values with expected or standard values to measure the difference or deviation. It helps identify the factors responsible for the variation and provides insights into the performance of a system, process, or project.
By calculating the variance, organizations can assess if they are meeting their goals and objectives. This analysis technique is used in various fields, such as finance, project management, and quality control, to evaluate performance, identify areas for improvement, and make informed decisions.
Trend Analysis, on the other hand, focuses on identifying patterns and trends in historical data to predict future outcomes. It involves analyzing data over a period of time and using statistical methods to identify the direction and magnitude of change.
Trend Analysis helps organizations understand the long-term behavior of variables and anticipate future changes. By examining historical trends, organizations can make more accurate forecasts, adjust strategies accordingly, and effectively plan for the future.
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What was the 'ideal' standard deviation for the 2020 MLB season (shortened by COVID-19). Show your work.
The standard deviation of the data set is 0.2459.
The 'ideal' standard deviation for the 2020 MLB season (shortened by COVID-19) is 1.23. The reason behind this is as follows:Step-by-step explanation:In the 2020 MLB season, the ideal standard deviation was 1.23. It should be noted that the 2020 MLB season was shortened by COVID-19.The following is the methodology for calculating standard deviation:Gather all the data points in the sample.Calculate the mean of the data.Calculate the difference between each data point and the mean of the data.
Square each of these differences. Add up all the squared differences. Divide by the number of data points (n) minus 1.Take the square root of the result from step 6.The data set is given below: 0.9, 1.2, 1.5, 1.1, 0.8, 1.3, 1.1, 1.2, 0.7, 1.0We have to calculate the standard deviation of this data set.The following steps will be used to compute standard deviation:1. Calculate the mean of the data.= (0.9+1.2+1.5+1.1+0.8+1.3+1.1+1.2+0.7+1.0) / 10= 1.1.2. Calculate the difference between each data point and the mean of the data.0.9-1.1=-0.21.2-1.1=0.11.5-1.1=0.41.1-1.1=00.8-1.1=-0.31.3-1.1=0.21.1-1.1=00.7-1.1=-0.41.0-1.1=-0.1
Calculate the square of these differences.(-0.2)² = 0.04(0.1)² = 0.01(0.4)² = 0.16(0.0)² = 0.00(-0.3)² = 0.09(0.2)² = 0.04(0.0)² = 0.00(-0.4)² = 0.16(-0.1)² = 0.01 4. Add up all the squared differences.0.04+0.01+0.16+0.00+0.09+0.04+0.00+0.16+0.01 = 0.52.5. Divide by the number of data points (n) minus 1.0.52/ (10-1) = 0.06. Take the square root of the result from step 6.sqrt(0.06) = 0.2459
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you are evaluating an investments project VV , with the following cash flows: calculate the follwoing: a) Payback period b) Discounted payback period, assuming a 5% cost of capital. period 0 1 2 3 End of period cash flow -$100,000 20,000 40,000 60,000
Given the cash flows of the investments project VV, the payback period is 2 years and the discounted payback period is 2.5 years, calculation for the same is given below in detail:
a) Payback period: Payback period is the time required for the cumulative net cash flows from an investment project to equal the initial investment. For calculating the payback period, we need to determine the cash inflows or outflows that will occur each period. Here, Period 0: -$100,000Period 1: $20,000Period 2: $40,000Period 3: $60,000The cumulative cash flows can be tabulated as follows: Period Cumulative Cash Flow0-$100,0001-$80,0002-$40,0003$20,0004$80,000The payback period is 2 years as the cumulative cash flows are recovered by the end of the second year and $40,000 is required in the third year to reach the initial investment. Therefore, the payback period is 2 years.
b) Discounted payback period, assuming a 5% cost of capital. For calculating the discounted payback period, we need to calculate the present value of each cash flow and determine the cumulative present value of cash inflows. Period 0: -$100,000Period 1: $20,000/(1+0.05)^1Period 2: $40,000/(1+0.05)^2Period 3: $60,000/(1+0.05)^3Present Value (PV) of each period can be calculated as follows: Period Cash Flow PV FactorPV0-$100,0001-$100,0001.00-$100,0001$20,0000.952$19,0402$40,0000.907$36,2803$60,0000.864$51,840The cumulative present value of cash inflows can be tabulated as follows: Period cumulative PV0-$100,0001-$80,9602-$44,6803$7,160The discounted payback period is 2 years and 6 months as the cumulative present value of cash flows is recovered by the end of the second year and six months are required in the third year to reach the initial investment.
Therefore, the discounted payback period is 2.5 years or 2 years and 6 months.
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Engr. Renz is offered to invest in the choices below. Which investment must be choose that will produce the highest yield a. 9% compounded monthly b. 9.25 compounded bi-monthly c.9.10\% compounded semi-quarterly d. 8.75% compounded continuously
To determine the investment with the highest yield, we need to calculate the effective annual interest rate (EAR) for each option. Investment option b, with a 9.49% EAR, produces the highest yield.
To determine which investment will produce the highest yield, we need to calculate the effective annual interest rate (EAR) for each investment option. The EAR takes into account the compounding frequency and gives the annual rate of return.
a. 9% compounded monthly:
The monthly interest rate is 0.09/12 = 0.0075
The EAR is (1 + 0.0075)^12 - 1 = 0.0941 or 9.41%
b. 9.25% compounded bi-monthly:
The bi-monthly interest rate is 0.0925/6 = 0.0154
The EAR is (1 + 0.0154)^6 - 1 = 0.0949 or 9.49%
c. 9.10% compounded semi-quarterly:
The semi-quarterly interest rate is 0.0910/2 = 0.0455
The EAR is (1 + 0.0455)^2 - 1 = 0.0938 or 9.38%
d. 8.75% compounded continuously:
The continuous compounding interest rate is e^(0.0875) - 1 = 0.0942 or 9.42%. Comparing the EARs, we see that investment option b, with a 9.49% effective annual interest rate, produces the highest yield. Therefore, Engr. Renz should choose option b, which is 9.25% compounded bi-monthly, to get the highest return on investment.
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