a. UBI program: Straight line parallel to leisure axis. Living wage program: Kink at $10 per hour market wage.
b. UBI: Mixed effect on labour supply. Living wage: Increases labour supply for < $10 per hour earners.
c. Cannot determine which program raises utility more for all workers. Preference depends on individual preferences and indifference curves.
For the "universal basic income" program: The budget constraint can be represented by a straight line parallel to the leisure axis, indicating that individuals receive a fixed transfer of $48 per day regardless of their level of labour supply. The slope of the budget constraint is equal to the market wage, which in this case is $8 per hour.
For the "living wage" program: The budget constraint will have a kink at the point where the individual's market wage reaches $10 per hour. Below this point, the budget constraint is represented by a straight line with a slope equal to the market wage of $8 per hour. Above this point, the budget constraint becomes vertical, indicating that individuals' effective hourly pay is $10 per hour.
Under the "universal basic income" program, individuals have the incentive to work because they can keep their $48 transfer in addition to any income they earn from working. However, the effect on labour supply may vary depending on individual preferences and the shape of their indifference curves. Under the "living wage" program, individuals who were earning less than $10 per hour have an incentive to work more as the subsidy raises their effective hourly pay to $10 per hour. This program can potentially increase labour supply for those individuals whose market wage is below $10 per hour.
The specific values of income and wages provided do not allow us to definitively determine which program would raise utility more for all workers compared to having neither program and receiving only the market wage. The outcome would depend on individual preferences and the shape of their indifference curves.
Some workers may prefer the "universal basic income" program if they highly value leisure and have a low preference for additional income beyond the $48 transfer. Others may prefer the "living wage" program if they are currently earning less than $10 per hour and value the increase in their effective hourly pay. The feasibility of consumption and leisure choices available under each program, along with individual preferences, will ultimately determine which program is preferred by different workers.
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The market for a cosmetic product is divided between two competitors, Alpha and Beta. Suppose that Alpha and Beta start by sharing the market equally, i.e. they each initially hold 50% of the market share. Analysts predict that, each year, 30% of Alpha customers will switch to Beta, and 20% of Beta customers will switch to Alpha.
(a) What is the migration (or stochastic or transition) matrix P for this problem?
(b) Determine the market shares of Alpha and Beta after one year, according to the forecasts of the
Analysts.
(c) Let's assume that Alpha and Beta do not change their marketing strategies and that the migration
between the two competitors remains the same. What will be the long-term market shares?
We need to solve the equation;X = XPThis gives the equation;X(1 - P) = 0Solving this equation, we get;X = [0.4 0.6]Therefore, the long-term market shares for Alpha and Beta are 40% and 60%, respectively.
(a)The migration matrix for this problem is given as;P = [0.7 0.3; 0.2 0.8](b)The market shares of Alpha and Beta after one year can be determined as follows:Suppose Xn = [a b] represents the probability vector for the market shares of Alpha and Beta. So, we have;X0 = [0.5 0.5]After one year, we have:X1 = X0 P = [0.5 0.5] [0.7 0.3; 0.2 0.8] = [0.55 0.45]Therefore, the market shares of Alpha and Beta after one year will be 55% and 45%, respectively.(c)To obtain the long-term market shares, we need to find the steady-state probabilities. Therefore, we need to solve the equation;X = XPThis gives the equation;X(1 - P) = 0Solving this equation, we get;X = [0.4 0.6]Therefore, the long-term market shares for Alpha and Beta are 40% and 60%, respectively.
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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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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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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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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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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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Suppose Russia's inflation rate is 50% over one year but the inflation rate in Japan is only 1%. According to relative PPP, what should happen over the year to the Japanese yen's exchange rate against the Russian ruble?
According to relative purchasing power parity (PPP), the Japanese yen's exchange rate against the Russian ruble should appreciate.
This is because Japan's lower inflation rate compared to Russia suggests that the Japanese yen has relatively higher purchasing power, leading to an increase in its value against the Russian ruble.
Relative purchasing power parity (PPP) is an economic theory that suggests exchange rates between two countries should adjust based on the relative changes in their price levels or inflation rates.
In this case, Russia's inflation rate of 50% over one year indicates a significant increase in its price levels, while Japan's inflation rate of 1% implies a relatively smaller increase in its price levels.
According to PPP, the currency of the country with lower inflation will appreciate against the currency of the country with higher inflation.
In this scenario, since Japan's inflation rate is significantly lower than Russia's, the Japanese yen is expected to appreciate against the Russian ruble. This means that it will take fewer Japanese yen to buy one Russian ruble.
It's important to note that while relative PPP provides a theoretical framework, in reality, exchange rates are influenced by various factors including market dynamics, interest rates, capital flows, and geopolitical events.
Therefore, the actual exchange rate movements may not precisely match the predictions of relative PPP.
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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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Q1
Draw indifference curves for a patient consumer compared to an individual with a need for instant gratification
Q2
Use the Keynesian cross diagram to show how a fall in government spending can affect consumption
Additionally, explain the marginal propensity to consume and explain how it is related to the Keynesian Model of Consumption. What role does the MPC play in the money multiplier? Q3
What are the impulses and propagation mechanisms of real business cycle theory and Keynesian models? Q4
Real business cycle theory implies that negative total factor productivity shocks cause recessions. What do you think such shocks might be?
Additionally, draw and explain one cycle of the business cycle, and explain each of the primary theories of the cause of the business cycle.
Indifference curves reflect consumer preferences. In the Keynesian cross diagram, a fall in government spending shifts the aggregate expenditure line down, reducing the equilibrium level of output. Real business cycle theory identifies exogenous shocks as impulses.
Q1: Indifference curves for a patient consumer would be flatter, indicating a higher willingness to wait for goods, while curves for an individual with instant gratification needs would be steeper, showing a preference for immediate consumption.
Q2: A fall in government spending in the Keynesian cross diagram shifts the aggregate expenditure line down, reducing the equilibrium level of output. Consumption, a component of expenditure, decreases as a result.
The marginal propensity to consume (MPC) is the fraction of additional income consumed rather than saved. In the Keynesian Model, a higher MPC leads to a steeper consumption function and a greater multiplier effect, amplifying the impact of changes in aggregate demand.
The MPC also plays a role in the money multiplier process, as a higher MPC leads to increased initial spending, driving further consumption and economic activity.
Q3: Real business cycle theory identifies exogenous shocks as impulses, such as technological changes or productivity shifts, causing fluctuations in economic activity. Propagation mechanisms involve positive shocks boosting output, income, and investment, while negative shocks lead to a decline in these factors.
Q4: Negative total factor productivity shocks in real business cycle theory can arise from technological regressions, natural disasters, policy changes, or external events impacting productivity. These shocks disrupt resource allocation, resulting in output and economic decline. The business cycle consists of alternating periods of expansion and contraction, with Keynesian, monetarist, and real business cycle theories explaining its causes through aggregate demand, monetary policy, and exogenous shocks, respectively.
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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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KNY issued a 120-day note in the amount of $500,000 on 12/1/17 with an annual rate of 7%. What amount of interest has accrued as of 12/21/17?
As of 12/21/17, the amount of interest accrued on the note is approximately $9,589.04.
To calculate the amount of interest accrued on the 120-day note, we need to determine the time period between the issuance date (12/1/17) and the date of interest calculation (12/21/17).
The interest on the note is calculated using the simple interest formula:
Interest = Principal x Rate x Time
In this case, the principal is $500,000, and the annual interest rate is 7%. However, we need to convert the time period to match the rate's timeframe.
The time period between 12/1/17 and 12/21/17 is 20 days. To determine the fraction of the year that represents, we divide 20 by the number of days in a year (365):
Time = 20 / 365
Now, we can calculate the interest accrued:
Interest = $500,000 x 0.07 x (20 / 365)
Interest ≈ $9,589.04
Therefore, as of 12/21/17, the amount of interest accrued on the note is approximately $9,589.04.
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A bond that has an embedded put is more valuable at _________________ interest rates. Over this region on the price/yield curve you can see that a puttable bond has __________________ value than an option-free bond. These bonds are valuable to the bond ______________ as they have the right to exercise the embedded put option.
A bond that has an embedded put is more valuable at lower interest rates. Over this region on the price/yield curve, a puttable bond has higher value than an option-free bond.
A bond with an embedded put option gives the bondholder the right to sell the bond back to the issuer at a predetermined price (put price) before its maturity date. The value of a puttable bond increases as interest rates decrease because lower interest rates make it more attractive for bondholders to exercise the put option and receive the predetermined price.
In the region of the price/yield curve where interest rates are low, the puttable bond's value surpasses that of an option-free bond. This is because the put option provides the bondholder with added flexibility and downside protection, allowing them to sell the bond at a favorable price if market conditions change.
These puttable bonds are valuable to bondholders as they have the right to exercise the embedded put option, providing them with a degree of control and liquidity. In times of uncertainty or declining interest rates, the ability to sell the bond back to the issuer at a predetermined price can be advantageous for bondholders, making the bond more valuable to them.
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a business letter would be appropriate for each of the following situations except
A business letter would be appropriate for each of the following situations except "For informal invitations such as wedding invitations, birthday invitations and other social functions".
A business letter is a formal method of communication between two parties. It is used to convey information, request something, or provide details of a particular product or service. It should be drafted using a professional tone, appropriate language, and format.
For informal invitations such as wedding invitations, birthday invitations, and other social functions, a business letter is not suitable. Instead, it is customary to use informal means of communication such as email or an invitation card to invite someone to a social function.
In conclusion, a business letter is not appropriate for informal invitations such as wedding invitations, birthday invitations, and other social functions, and this is the only situation where a business letter would not be suitable.
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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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Tyrene Products manufactures recreational equipment. One of the company's products, a skateboard, sells for $37.50. The skateboards are manufactured in an antiquated plant that relies heavily on direct labor workers. Thus, variable costs are high, totaling $22.50 per skateboard of which 60% is direct labor cost. Over the past year, the company sold 40,000 skateboards, with the following operating results: Sales (40,000 skateboards). $1,500,000
Variable expenses. 900,000 Contribution margin. 600,000
Fixed expenses 480,000
Net operating income.$120.000 Required: 1. Compute (a) the CM ratio and the break-even point in skateboards, and (b) the degree of operating leverage at last year's level of sales. (3 pts)
The CM (Contribution Margin) ratio for Tyrene Products is 40% and the break-even point in terms of skateboards is 16,000 units. The degree of operating leverage at last year's level of sales is 2.
To compute the CM ratio, we divide the contribution margin by the sales. The contribution margin is the difference between the sales revenue and the variable expenses. In this case, the contribution margin is $600,000 and the sales are $1,500,000. Therefore, the CM ratio is ($600,000 / $1,500,000) = 40%.
To determine the break-even point in terms of skateboards, we divide the fixed expenses by the CM per unit. The CM per unit is the difference between the selling price and the variable cost per unit. In this case, the variable cost per unit is $22.50 and the selling price is $37.50. Thus, the CM per unit is ($37.50 - $22.50) = $15.00. The fixed expenses are $480,000. Therefore, the break-even point in skateboards is ($480,000 / $15.00) = 16,000 units.
The degree of operating leverage can be calculated by dividing the contribution margin by the net operating income. In this case, the contribution margin is $600,000 and the net operating income is $120,000. Therefore, the degree of operating leverage is ($600,000 / $120,000) = 2.
These calculations provide insights into Tyrene Products' cost structure, break-even point, and the sensitivity of its profits to changes in sales volume.
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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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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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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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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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(1) Write a short factual report addressing each of the following: (a) What exactly happens in an actual Pinto collision? (b) What evidence was there that the Pinto was defective? (c) On what basis does a recall coordinator make a decision to recall? (d) Why wasn't the car recalled once the recall office found out about the design flaw of the car? PINTO_GIOIA_ARTICLE.pdf
(a) In an actual Pinto collision, the fuel tank located near the rear bumper can be punctured and result in a fuel leak, potentially leading to a fire or explosion.
(b) Evidence of the Pinto being defective included internal documents showing that Ford was aware of the design flaw and the potential risk of fires. Additionally, crash tests conducted by experts and testimonies from accident victims indicated that the Pinto had a higher risk of fuel tank rupture and fire compared to other vehicles.
(c) A recall coordinator makes a decision to recall based on several factors, including the severity of the defect, the potential risk to consumers, the number of affected vehicles, and the cost of the recall.
(d) The car wasn't recalled once the recall office found out about the design flaw because Ford made a cost-benefit analysis that weighed the potential expenses of recalls, lawsuits, and settlements against the cost of improving the vehicle's safety. Ford decided that it was more financially advantageous to pay potential legal settlements rather than issuing a recall.
(a) In an actual Pinto collision, the location of the fuel tank near the rear bumper made it susceptible to punctures upon impact. As a result, fuel could leak from the tank, increasing the risk of fire or explosion.
(b) Evidence of the Pinto being defective emerged through internal Ford documents that revealed the company's knowledge of the design flaw and the potential danger it posed. These documents indicated that Ford had conducted a cost-benefit analysis that prioritized cost savings over consumer safety. Crash tests conducted by experts also demonstrated that the Pinto had a higher likelihood of fuel tank rupture and fire compared to other similar vehicles. Furthermore, testimonies from accident victims supported the claim that the Pinto was defective and posed a significant risk to drivers and passengers.
(c) A recall coordinator makes decisions regarding recalls based on several factors. They consider the severity of the defect, assessing how it can potentially harm consumers. They also evaluate the number of affected vehicles to determine the scale of the recall. Additionally, the potential risks and consequences to public safety are carefully weighed. The cost of the recall, including expenses associated with repairs, communication, and logistics, is another crucial factor in the decision-making process.
(d) Despite the recall office becoming aware of the Pinto's design flaw, the car was not recalled because Ford made a calculated decision based on a cost-benefit analysis. Ford determined that the potential expenses from recalls, lawsuits, and settlements resulting from accidents were outweighed by the cost of improving the Pinto's safety. The company chose to prioritize financial considerations over consumer safety, leading to the decision not to recall the vehicle.
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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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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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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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Shut down or continue operations. WOW Company produces and sells 140,000 units monthly except for the months of July and August when the number of units sold normally decline to 10,000 units per month. Management contemplates of temporarily shutting down operations in the months of July and August with the belief that the business will be spared of more losses during the period. If the business temporarily shuts down, security and maintenance amounting to P220,000 per month would still be incurred. Restarting the operations will cost the business P300,000 for mobilization and other costs. The business incurs a total of P24 million annual fixed costs allocated evenly over a 12-month period. This fixed cost is expected to drop by 60% during the months the operations are shut down. Other sales and costs data are as follows: Unit sales price Unit variable production costs Unit variable expenses P30014040 unit contribution margin = Required: 1. How much is the total shutdown cost? 2. What is the shutdown point? 3. Should the business continue or shut down?
To determine whether the business should continue or shut down during the months of July and August, we need to analyze the costs and revenues associated with both scenarios. Let's calculate the total shutdown cost, shutdown point, and evaluate the decision.
Total Shutdown Cost:
During the shutdown months, the business will incur security and maintenance costs of P220,000 per month. Additionally, the fixed costs are expected to drop by 60% during these months. Since the total annual fixed costs are P24 million, the monthly fixed costs amount to P2 million (P24 million / 12 months). Therefore, during the shutdown months, the reduced fixed costs will be 60% of P2 million, which is P1.2 million.
The total shutdown cost can be calculated by adding the security and maintenance costs and the reduced fixed costs:
Total Shutdown Cost = Security and Maintenance Costs + Reduced Fixed Costs
Total Shutdown Cost = P220,000 + P1,200,000
Total Shutdown Cost = P1,420,000
Shutdown Point:
The shutdown point is the level of unit sales at which the business is indifferent between shutting down and continuing operations. To determine the shutdown point, we need to compare the costs and revenues of the two scenarios.
During the regular months (non-shutdown months), the business sells 140,000 units. Each unit contributes P140 (unit contribution margin) towards covering the fixed costs and generating profit.
During the shutdown months, the business sells only 10,000 units. Each unit contributes P40 (unit contribution margin) towards covering the reduced fixed costs and generating profit.
To find the shutdown point, we set up the equation:
Total Shutdown Cost = (Unit Contribution Margin x Shutdown Point)
Rearranging the equation, we can solve for the shutdown point:
Shutdown Point = Total Shutdown Cost / Unit Contribution Margin
Shutdown Point = P1,420,000 / P40
Shutdown Point = 35,500 units
Therefore, if the business expects to sell fewer than 35,500 units during the months of July and August, it would be more cost-effective to shut down operations.
Decision:
To determine whether the business should continue or shut down, we compare the total costs in both scenarios.
a) Continuing Operations:
During the regular months, the business sells 140,000 units with a unit contribution margin of P140. The total contribution margin can be calculated as follows:
Total Contribution Margin = Unit Contribution Margin x Units Sold
Total Contribution Margin = P140 x 140,000
Total Contribution Margin = P19,600,000
Total Costs during regular months = Fixed Costs + Variable Costs
Total Costs = P2,000,000 + (Variable Production Costs + Variable Expenses) x Units Sold
Total Costs = P2,000,000 + (P140 + P40) x 140,000
Total Costs = P2,000,000 + P23,800,000
Total Costs = P25,800,00
b) Shutdown Operations:
During the shutdown months, the business sells 10,000 units with a unit contribution margin of P40. The total contribution margin can be calculated as follows:
Total Contribution Margin = Unit Contribution Margin x Units Sold
Total Contribution Margin = P40 x 10,000
Total Contribution Margin = P400,000
Total Costs during shutdown months = Shutdown Costs + Variable Costs
Total Costs = P1,420,000 + (Variable Production Costs + Variable Expenses) x Units Sold
Total Costs = P1,420,000 + (P140 + P40) x 10,000
Total Costs = P1,420,000 + P1,800,000
Total Costs = P3,220,000
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To determine whether the business should continue or shut down during the months of July and August, we need to analyze the costs and revenues associated with both scenarios. Let's calculate the total shutdown cost, shutdown point, and evaluate the decision.
Total Shutdown Cost:
During the shutdown months, the business will incur security and maintenance costs of P220,000 per month. Additionally, the fixed costs are expected to drop by 60% during these months. Since the total annual fixed costs are P24 million, the monthly fixed costs amount to P2 million (P24 million / 12 months). Therefore, during the shutdown months, the reduced fixed costs will be 60% of P2 million, which is P1.2 million.
The total shutdown cost can be calculated by adding the security and maintenance costs and the reduced fixed costs:
Total Shutdown Cost = Security and Maintenance Costs + Reduced Fixed Costs
Total Shutdown Cost = P220,000 + P1,200,000
Total Shutdown Cost = P1,420,000
Shutdown Point:
The shutdown point is the level of unit sales at which the business is indifferent between shutting down and continuing operations. To determine the shutdown point, we need to compare the costs and revenues of the two scenarios.
During the regular months (non-shutdown months), the business sells 140,000 units. Each unit contributes P140 (unit contribution margin) towards covering the fixed costs and generating profit.
During the shutdown months, the business sells only 10,000 units. Each unit contributes P40 (unit contribution margin) towards covering the reduced fixed costs and generating profit.
To find the shutdown point, we set up the equation:
Total Shutdown Cost = (Unit Contribution Margin x Shutdown Point)
Rearranging the equation, we can solve for the shutdown point:
Shutdown Point = Total Shutdown Cost / Unit Contribution Margin
Shutdown Point = P1,420,000 / P40
Shutdown Point = 35,500 units
Therefore, if the business expects to sell fewer than 35,500 units during the months of July and August, it would be more cost-effective to shut down operations.
Decision:
To determine whether the business should continue or shut down, we compare the total costs in both scenarios.
a) Continuing Operations:
During the regular months, the business sells 140,000 units with a unit contribution margin of P140. The total contribution margin can be calculated as follows:
Total Contribution Margin = Unit Contribution Margin x Units Sold
Total Contribution Margin = P140 x 140,000
Total Contribution Margin = P19,600,000
Total Costs during regular months = Fixed Costs + Variable Costs
Total Costs = P2,000,000 + (Variable Production Costs + Variable Expenses) x Units Sold
Total Costs = P2,000,000 + (P140 + P40) x 140,000
Total Costs = P2,000,000 + P23,800,000
Total Costs = P25,800,00
b) Shutdown Operations:
During the shutdown months, the business sells 10,000 units with a unit contribution margin of P40. The total contribution margin can be calculated as follows:
Total Contribution Margin = Unit Contribution Margin x Units Sold
Total Contribution Margin = P40 x 10,000
Total Contribution Margin = P400,000
Total Costs during shutdown months = Shutdown Costs + Variable Costs
Total Costs = P1,420,000 + (Variable Production Costs + Variable Expenses) x Units Sold
Total Costs = P1,420,000 + (P140 + P40) x 10,000
Total Costs = P1,420,000 + P1,800,000
Total Costs = P3,220,000
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The cost function for ACME Gewgas' product is c = 0.04q² + 15q + 144, where q is ACME's weekly output, and c is the cost of producing q Gewgaws per day. ACME's minimum daily average cost is:_________
The ACME's minimum daily average cost, given the cost function for ACME Gewgas' product is c = 0.04q² + 15q + 144 is $10,350.
Given, the cost function for ACME Gewgas' product is c = 0.04q² + 15q + 144, where q is ACME's weekly output, and c is the cost of producing q Gewgaws per day. To find ACME's minimum daily average cost, we need to use calculus.
We can start by finding the derivative of the cost function: $$\frac{dc}{dq}= 0.08q + 15$$. Next, we set the derivative equal to zero and solve for q: $$\frac{dc}{dq} = 0$$$$0.08q + 15 = 0$$$$0.08q = -15$$$$q = \frac{-15}{0.08}$$. Therefore, q = -187.5 is the value that minimizes the cost function.
Since we cannot produce negative quantities, we know this answer is not reasonable. We must look for the point on the curve closest to the derivative equaling zero.Therefore, the minimum point on the curve occurs when q = -15 / 0.08 = -187.5.
However, we know that negative quantities do not make sense, so we must look for the point on the curve closest to this value. We can do this by plugging q = -187.5 into the cost function:c = 0.04(-187.5)² + 15(-187.5) + 144 = 10350This means that ACME's minimum daily average cost is $10,350.
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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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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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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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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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It is ONE question with multiple parts, it's Chegg approved. PLEASE READ CAREFULLY AND DO AND COMPLETE EVERYTHING THE QUESTION ASKS TO THE BEST OF YOUR ABILITY. Thank you so much! 8. If no real-life industry meets the conditions of the perfectly competitive model exactly, why do we study perfect competition? What is the relevance of the model to a decision to switch careers? How might it shed some light on pollution, acid rain, and other social problems?
The study of perfect competition is valuable despite its deviation from real-life industries. It provides a benchmark for understanding market dynamics and serves as a theoretical foundation for analyzing various economic phenomena.
Perfect competition serves as an important benchmark in economics because it provides a simplified framework for understanding market behavior and efficiency. While no industry perfectly aligns with the conditions of perfect competition, studying this model allows economists to analyze the effects of competition, pricing mechanisms, and resource allocation in a theoretical setting. It helps identify the benefits of competitive markets, such as consumer welfare and efficiency, and serves as a reference point for evaluating real-world market structures.
In terms of career decisions, understanding perfect competition can offer insights into the forces that shape labor markets. It provides a framework for assessing factors like supply and demand for specific skills, wage determination, and mobility of labor. By considering how competitive pressures influence wages and job opportunities, individuals can make more informed decisions when contemplating career switches or evaluating the potential demand for their skills.
Additionally, the model of perfect competition can shed light on social problems such as pollution and acid rain. It highlights the role of externalities, where the actions of producers or consumers impose costs or benefits on third parties not directly involved in the transaction. By recognizing that perfect competition does not inherently address externalities, policymakers can understand the need for interventions like environmental regulations or market-based solutions to address these social problems. Perfect competition can guide the analysis of market failures and the design of appropriate policies to mitigate negative externalities and promote social welfare.
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