While it is true that a family business may have the advantage of trust among key employees, it is not necessarily accurate to assume that this automatically translates to reduced spending on theft prevention systems and employee monitoring.
The assumption that family members are inherently more trustworthy can be misleading, as trust is not solely based on family ties but on individual character and values. Additionally, every business, regardless of family involvement, should have measures in place to ensure proper employee behavior and safeguard against theft or misconduct. Implementing appropriate systems and controls is essential for maintaining accountability, preventing losses, and ensuring the overall success and integrity of the business. Therefore, it is advisable for family businesses, like any other organization, to invest in appropriate systems and procedures to address security concerns and monitor employee performance effectively.
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Diamond Foods Payments to Nut Growers
The leadership of Diamond Foods (DF), the global California-based premium snack food company, was excited. In the fall of 2011, the company was close to finalizing an agreement with Proctor & Gamble to acquire Pringles brand in exchange for DF stock, this acquisition would help the company achieve the number two position in the U.S. snack foods industry behind PepsiCo. DF product lines currently included potatoes chips (Kettle), popcorn (Pop-Secret), and (nuts) snack nuts, in-shell nuts and culinary nuts) Emerald and Diamond of California). DF started in 1912 as a grower-owned cooperative called Diamond of California. The company originally focused on walnuts, but more recently they transformed into a diverse snack food company. The business changed from a co-operative business status and went public in 2005 with the NASDAQ ticker DMND. The stock price increased, and in September 2011, the price was at an all-time high of $92 per share.
The person who orchestrated the company’s expansion and growth was CEO and President Michael Mendes, who was hired in 1997. He had previously worked at Hormel Foods Corporation and Dole Food Company. Mendez was very competitive and implemented the companywide philosophy of "bigger is better". This viewpoint was the corporate culture, and it had a significant impact on employees of DF. This aggressive company culture resulted in an emphasis on financial performance and some bold and very expensive acquisitions (e.g., Kettle and Pop-Secret). The most expensive acquisition was to be Pringles. DF was making this acquisition, so it could be a significant player in the very competitive snack foods space where it felt pressure for financial success and greater market share amid increasing industry competition.
In Fall of 2011, Mark Roberts, founder of the Off-Wall Street Consulting Group, received an anonymous call. For the fiscal year ending in July 2011, the caller indicated that DF was making ‘momentum payments’ to growers for walnuts delivered in September 2011. It appears that the approximately $60 million payments could be impacting the wrong fiscal year financial statements. Robert accused DF of incorrectly reporting its payments to suppliers on the company financial statements. DF denied any illegal actions, and they replied that the payments were on advance on the fiscal 2012 crop and had nothing to do with fiscal 2011. Unfortunately, the nut growers disagreed. They were told by the company to keep the money even if they were not going to provide crops for 2012. Supposedly, they were told that the payments were for the prior year.
Investigation into the situation ascertained that an additional approximately $20 million of ‘continuity payments’ were made by DF growers in fall 2010. Again, the question arose as to what fiscal year did these payments relate. Were the payments recorded in the proper year? Were the books cooked? Would the Pringles acquisition occur?
There are many accounting rules that may apply in this case. Discuss the rules that you believe may apply.
In what fiscal periods should fall 2010 and fall 2011 payments have been recorded in the DF income statements?
When was the cash paid to the growers? Was it a different period than when the payments were recorded?
How were the financial statements impacted in 2010 and 2011?
2. Were there any other things happening in the company that could have had a part in this?
3. How was this case of fraud found? Who found it? What are some steps that could have been taken that may have prevented this? What changes did this company make in order to prevent this from occurring again?
4. In the end, was the Pringles line acquired?
The accounting rules that may apply in this case include revenue recognition, accrual accounting, and the matching principle.
The fall 2010 and fall 2011 payments should have been recorded in the income statements of the corresponding fiscal periods when the services were provided or the goods were delivered. The cash paid to the growers may have occurred in a different period than when the payments were recorded. The financial statements of DF in 2010 and 2011 were likely impacted by the incorrect recording of payments, potentially leading to misstated financial results.
The case of fraud was discovered through an anonymous call to Mark Roberts, who raised concerns about the payments. Steps that could have been taken to prevent this include implementing stronger internal controls, conducting regular audits, and ensuring compliance with accounting principles. To prevent similar incidents, the company may have made changes such as improving financial oversight, enhancing transparency, and tightening the process for recording payments.
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The two main qualitative characteristics that financial information should possess have beenidentified a relevance and representational faithfulness. Is one more important than the other orare they equally important
Both relevance and representational faithfulness are essential qualitative characteristics of financial information, and they are equally important. Let's understand each characteristic:
Relevance: Financial information is considered relevant if it is capable of influencing the economic decisions of users. Relevant information helps users assess past, present, and future events or confirm or correct their previous evaluations. To be relevant, information should have predictive value, confirmatory value, or both. It should provide useful insights and assist users in making informed decisions.
Representational Faithfulness: Representational faithfulness refers to the extent to which financial information faithfully represents the economic phenomena it purports to represent. It means that the information should accurately reflect the underlying economic reality. Financial statements should faithfully represent the financial position, performance, and cash flows of an entity.
Both relevance and representational faithfulness are crucial because they serve different purposes:
Relevance focuses on the usefulness of information for decision-making. It ensures that the information provided is pertinent, timely, and has the potential to impact users' decisions. Relevant information helps users make better-informed judgments and choices.
Representational faithfulness ensures that the information accurately represents the economic reality of the entity. It promotes transparency, reliability, and comparability of financial information. Faithful representation helps users understand the true financial position and performance of the entity.
These two characteristics work together to provide meaningful financial information. Without relevance, even the most faithfully represented information may not be useful to users. Conversely, without representational faithfulness, relevant information may be misleading or inaccurate. Therefore, both characteristics are equally important in the preparation and presentation of financial information to meet the needs of users effectively.
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Both relevance and representational faithfulness are essential qualitative characteristics of financial information, and they are equally important. Let's understand each characteristic:
Relevance: Financial information is considered relevant if it is capable of influencing the economic decisions of users. Relevant information helps users assess past, present, and future events or confirm or correct their previous evaluations. To be relevant, information should have predictive value, confirmatory value, or both. It should provide useful insights and assist users in making informed decisions.
Representational Faithfulness: Representational faithfulness refers to the extent to which financial information faithfully represents the economic phenomena it purports to represent. It means that the information should accurately reflect the underlying economic reality. Financial statements should faithfully represent the financial position, performance, and cash flows of an entity.
Both relevance and representational faithfulness are crucial because they serve different purposes:
Relevance focuses on the usefulness of information for decision-making. It ensures that the information provided is pertinent, timely, and has the potential to impact users' decisions. Relevant information helps users make better-informed judgments and choices.
Representational faithfulness ensures that the information accurately represents the economic reality of the entity. It promotes transparency, reliability, and comparability of financial information. Faithful representation helps users understand the true financial position and performance of the entity.
These two characteristics work together to provide meaningful financial information. Without relevance, even the most faithfully represented information may not be useful to users. Conversely, without representational faithfulness, relevant information may be misleading or inaccurate. Therefore, both characteristics are equally important in the preparation and presentation of financial information to meet the needs of users effectively.
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3) In the global economy, there are stories of highly successful local clusters, also called local entrepreneurship ecosystems, local industrial hubs, technology hubs etc. The Silicon Valley is a famous example. Research and find out another example (not the Silicon Valley) for one of these successful local clusters and explain three factors that make your example successful (have a look at Week.13 Slides No. 18-20).
One successful global cluster is the Research Triangle Park (RTP) in North Carolina, USA. Its success can be attributed to partnerships, location, and diversity.
Its success can be attributed to partnerships, location, and diversity. The RTP is home to over 200 companies, including tech giants IBM and Cisco. Its success is driven by strong partnerships between universities and businesses, strategic location near three major universities, and a diverse range of industries that promotes innovation and cross-sector collebration
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STOCK VALUATION AT RAGAN ENGINES
Larissa has been talking with the company's directors about the future of East Coast Yachts. To this point, the company has used outside suppliers for various key components of the com- pany's yachts, including engines. Larissa has decided that East Coast Yachts should consider the purchase of an engine manufacturer to allow East Coast Yachts to better integrate its supply chain and get more control over engine features. After investigating several possible companies, Larissa feels that the purchase of Ragan Engines, Inc., is a possibility. She has asked Dan Ervin to analyze Ragan's value.
Ragan Engines, Inc., was founded nine years ago by a brother and sister-Carrington and Genevieve Ragan-and has remained a privately owned company. The company manufactures marine engines for a variety of applications. Ragan has experienced rapid growth because of a proprietary technology that increases the fuel efficiency of its engines with very little sacrifice in performance. The company is equally owned by Carrington and Genevieve. The original agreement between the siblings gave each 150,000 shares of stock.
Larissa has asked Dan to determine a value per share of Ragan stock. To accomplish this, Dan has gathered the following information about some of Ragan's competitors that are publicly traded:
EPS DPS Stock Price ROE R
Blue Ribband Motors Corp. $1.09 $.19 $16.32 10.00% 12.00%
Bon Voyage Marine, Inc. 1.26 55 13.94 12.00 17.00
Nautilus Marine Engines (27) 57 23.97 N/A 16.00
Industry average $.69 $44 $18.08 11.00% 15.00%
Nautilus Marine Engines's negative earnings per share (EPS) were the result of an accounting write-off last year. Without the write-off, EPS for the company would have been $2.07. Last year, Ragan had an EPS of $5.35 and paid a dividend to Carrington and Genevieve of $320,000 each. The company also had a return on equity of 21 percent. Larissa tells Dan that a required return for Ragan of 18 percent is appropriate.
1. Assuming the company continues its current growth rate, what is the value per share of the company's stock?
2. Dan has examined the company's financial statements, as well as examining those of its competitors. Although Ragan currently has a technological advantage, Dan's research indicates that Ragan's competitors are investigating other methods to improve efficiency. Given this, Dan believes that Ragan's technological advantage will last only for the next five years. After that period, the company's growth will likely slow to the industry aver- age. Additionally, Dan believes that the required return the company uses is too high. He believes the industry average required return is more appropriate. Under Dan's assump- tions, what is the estimated stock price?
3. What is the industry average price-earnings ratio? What is Ragan's price-earnings ratio? Comment on any differences and explain why they may exist.
4. Assume the company's growth rate declines to the industry average after five years. What percentage of the stock's value is attributable to growth opportunities?
5. Assume the company's growth rate slows to the industry average in five years. What future return on equity does this imply?
6. Carrington and Genevieve are not sure if they should sell the company. If they do not sell the company outright to East Coast Yachts, they would like to try and increase the value of the company's stock. In this case, they want to retain control of the company and do not want to sell stock to outside investors. They also feel that the company's debt is at a manageable level and do not want to borrow more money. What steps can they take to try and increase the price of the stock? Are there any conditions under which this strategy would not increase the stock price?
1.This gives us a value per share of $36.53.
2. stock price decreases to $24.89 per share.
3.P/E ratio = Stock price / EPS
Ragan's P/E ratio is:
P/E ratio = $5.35 / $44 = 0.122
4.Therefore, the percentage of the stock's value attributable to growth opportunities is: 34.38%
5.Future ROE = 1 / 0.15 - 0.11 = 25%
6 .Increase profitability: Ragan can try to improve its operational efficiency and reduce costs to increase profitability, which would increase the company's earnings and potentially lead to good organization.
To calculate the value per share of Ragan's stock, we can use the dividend discount model. With an EPS of $5.35 and a dividend payment of $320,000 to each shareholder, the total dividends paid out by Ragan are $640,000. Using the required return of 18%, we can calculate the present value of these future dividend payments over an infinite time horizon. This gives us a value per share of $36.53.
If we assume that Ragan's technological advantage will only last for the next five years and use the industry average required return of 15%, the estimated stock price decreases to $24.89 per share.
The industry average price-earnings (P/E) ratio is calculated as the market price per share divided by earnings per share. Given the information provided, the industry average P/E ratio is ($18.08/$0.69) = 26.29. Ragan's P/E ratio is calculated as ($36.53/$5.35) = 6.81. The lower P/E ratio for Ragan may exist because investors are uncertain about the sustainability of Ragan's technological advantage or the long-term growth prospects of the company.
Assuming that the growth rate declines to the industry average after five years, we can use the Gordon growth model to estimate the portion of the stock's value attributable to growth opportunities. With a required return of 18% and a growth rate of 11%, the percentage of the stock's value attributable to growth opportunities is approximately 32%.
If the company's growth rate slows to the industry average in five years, we can use the sustainable growth rate formula (ROE × retention ratio) to estimate the future return on equity. With an ROE of 21% and assuming a retention ratio of 0.6, the implied future return on equity is approximately 12.6%.
To increase the price of the stock, Carrington and Genevieve could consider implementing strategies to improve the company's efficiency and reduce costs, such as investing in new technology or streamlining production processes. They could also explore opportunities for diversification into related markets or expanding their product line. However, it is important to note that these strategies may not necessarily increase the price of the stock if investors do not perceive them as adding value to the company. Additionally, external factors such as changes in the industry landscape or macroeconomic conditions may also impact the stock price.
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1. How would you future proof you supply chain as a Supply Chain Manager?
2. How would you develop digital capabilities in your workforce? (For example, you can say you'd introduce some skills training, offer a professional development budget for digital training, etc.)
1. Future-proofing the supply chain as a Supply Chain Manager involves implementing strategies and initiatives to ensure its resilience, flexibility, and efficiency in the face of evolving market dynamics and potential disruptions. Here are some key steps to consider:
a. Enhanced Visibility and Data Analytics: Implement advanced technologies, such as IoT devices and real-time data analytics, to gain end-to-end visibility into the supply chain. This enables proactive monitoring, identification of bottlenecks, and data-driven decision-making.
b. Diversification and Redundancy: Assess and diversify the supplier base to reduce dependence on a single source. Establish strategic partnerships and alternative sourcing options to mitigate risks and maintain continuity in the event of disruptions.
c. Agile and Collaborative Relationships: Foster collaboration and open communication with suppliers, logistics partners, and other stakeholders. Develop agile contracts and flexible agreements that allow for quick adaptations to changing market conditions.
d. Sustainability and Resilience: Integrate sustainable practices into the supply chain, including responsible sourcing, green logistics, and circular economy initiatives. Evaluate and enhance the resilience of critical supply chain nodes, such as distribution centers and transportation routes, to withstand potential disruptions.
e. Scenario Planning and Risk Management: Conduct scenario planning exercises to identify potential risks and develop contingency plans. Regularly review and update risk management strategies to address emerging threats, such as geopolitical instability or natural disasters.
2. Developing digital capabilities in the workforce is crucial for organizations to thrive in the digital era. Here are some approaches to fostering digital skills and competencies:
a. Skills Training and Upskilling: Identify digital skills gaps within the workforce and provide targeted training programs to develop those skills. Offer both in-house training initiatives and external courses to enhance employees' proficiency in areas such as data analysis, digital marketing, automation, and artificial intelligence.
b. Professional Development Budget: Allocate a dedicated budget for employees to pursue digital training and certifications. Encourage them to stay updated with the latest industry trends and technologies through online courses, conferences, and workshops.
c. Cross-Functional Collaboration: Facilitate cross-functional collaboration and knowledge sharing among employees from different departments. Encourage the formation of digital-focused teams or communities of practice to foster learning and innovation.
d. Internal Digital Champions: Identify individuals within the organization who have advanced digital skills and appoint them as digital champions or ambassadors. They can mentor and support other employees in acquiring digital competencies and act as change agents within the organization.
e. Continuous Learning Culture: Foster a culture of continuous learning and experimentation. Encourage employees to embrace new technologies, provide opportunities for hands-on experience with digital tools, and recognize and reward digital innovation and initiative-taking.
By implementing these strategies, organizations can build a workforce equipped with digital capabilities, enabling them to adapt to technological advancements, drive digital transformation initiatives, and remain competitive in the digital age.
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Next year Company Aw pay a dividend of $3.00. It expects to increase its dividend by $0.50 in each of the following three years. If their required rate of return is 15 percent, what is the present value of their dividends over the next four years? (Do not round intermediate calculations. Round final answer to two decimal places.) $10.46 $11.63 $12.50 $9.72
The present value of their dividends over the next four years is $9.88 (rounded to two decimal places).
The present value of dividends over the next four years when Company AW pays a dividend of $3.00 next year and expects to increase its dividend by $0.50 in each of the following three years and their required rate of return is 15 percent can be calculated using the formula:
PV of annuity = R × [{1 - (1 + i)^-n} / i]
Where,R = $3.00
i = 15% = 0.15
n = 4 (as they are paying dividend for next four years) $0.50 increase in each of the following three years = $0.50 + $3.00 = $3.50
PV of dividend for the 2nd year= $3.50 / (1 + 0.15)²= $2.55
PV of dividend for the 3rd year= $4.00 / (1 + 0.15)³= $2.33
PV of dividend for the 4th year= $4.50 / (1 + 0.15)⁴= $2.00
The present value of the dividends for the next four years is calculated by adding the present value of the four dividend payments.
That is, PV of dividends = PV of dividend for the 1st year + PV of dividend for the 2nd year + PV of dividend for the 3rd year + PV of dividend for the 4th year
PV of dividends = $3.00 + $2.55 + $2.33 + $2.00
PV of dividends = $9.88
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With an aid of a diagram explain the various factors that constitute the business environment. Your answer should include relevant examples for each of the factors discussed.
The business environment comprises various factors, such as economic, socio-cultural, political, technological, and legal influences. These elements can have a profound impact on the way a business operates.
Each of these elements is unique and crucial for business planning and decision-making. For example, economic factors include inflation, interest rates, and GDP growth, which can impact the company's profitability. Socio-cultural factors relate to societal norms and values that influence consumer behavior. Technological factors are advancements that can lead to innovative products or improvements in operational efficiency. Political factors include government policies and political stability, while legal factors encompass the laws and regulations a business must follow.
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Rue's utility function is U(x,y) = min{2, 3y). Jules' utility function is U(t,y) min{I, VT} 4 (a) Which of the bundles A = (4, 0.5), B = (3, 2) and C = (2, 4) does Rue prefer? Which of the bundles does Jules prefer? (b) For Rue, draw the indifference curve, denoted as I, that contains the bundles that she likes exactly as well as bundle (4,2). On the same graph, draw the indifference curve I, for Rue that passes through bundle (6,3) and draw the indifference curve Is for Rue that passes through bundle (8,3). Does her preference satisfy convexity?
Jules prefers bundle C over B and A.
Rue's level of utility must be higher than 2.
a) Rue's utility function:U(x,y) = min{2, 3y)
Bundle A = (4, 0.5), U(4, 0.5) = min{2, 3(0.5)} = 1.5
Bundle B = (3, 2), U(3, 2) = min{2, 3(2)} = 2
Bundle C = (2, 4), U(2, 4) = min{2, 3(4)} = 2
Therefore, Rue prefers bundle B over A and C.
Now let's look at Jules' utility function:U(t,y) = min{I, VT}4
Bundle A = (4, 0.5), U(4, 0.5) = min{I, 4(0.5)} = 0.5
Bundle B = (3, 2), U(3, 2) = min{I, 4(2)} = 2
Bundle C = (2, 4), U(2, 4) = min{I, 4(4)} = 4
Therefore, Jules prefers bundle C over B and A.
b) An indifference curve is a graph showing combinations of goods yielding equal utility.
To draw the indifference curve of Rue, we need to find the level of utility
U = 2 for a range of bundles.
First, we set up her utility function as follows:
U(x,y) = 2 = min{2, 3y}3y = 2y = 2/3x = 4/3
This means any bundle (4/3, y) gives Rue a utility level of 2.
If we plot these bundles on a graph, we get an indifference curve like this:
To draw the indifference curve that passes through bundle (6, 3), we can set up the utility function as follows:
U(x,y) = 2 = min{2, 3y}3y = 2y = 2/3x = 4/3
Since bundle (6, 3) has a higher quantity of x, we can say that 4/3 < 6.
Therefore, Rue's level of utility must be higher than 2.
Let's say her new level of utility is U = 3.
U(x,y) = 3 = min{2, 3y}3y = 5y = 5/3x = 2
This means any bundle (2, 5/3) gives Rue a utility level of 3.
If we plot these bundles on the same graph, we get an indifference curve like this:
Finally, we draw the indifference curve that passes through bundle (8, 3).
We can set up the utility function as follows:
U(x,y) = 2 = min{2, 3y}3y = 2y = 2/3x = 4/3
Since bundle (8, 3) has a higher quantity of x and the same quantity of y as bundle B, we know Rue's utility level is 2.
If we plot these bundles on the same graph, we get an indifference curve like this:
Rue's preference does not satisfy convexity because the curves do not bulge towards the origin.
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In 2006, daylight savings time began on April 2. In 2007, the USA pushed the date up to March 11, thereby expanding DST. In response to the USA change, Canada followed suit in order to align their time with the USA. This is an example of what type of game?
The example of the US and Canada following each other's Daylight Saving Time adjustments is an example of the Prisoner's Dilemma game.
The Prisoner's Dilemma game is a famous strategy game in game theory that entails two individuals who face an issue. The players must decide whether to cooperate or defect. The goal is to cooperate and achieve a higher pay-off. However, the game can result in a Nash Equilibrium in which both players defect because it benefits them more in the long run.In the situation described in the question, the US and Canada decided to follow one another's lead on Daylight Saving Time adjustments. The decision was made in response to the US's decision to expand DST. The players (US and Canada) agreed to cooperate in order to achieve the highest pay-off. In this case, the pay-off is synchronizing their time changes with one another's and avoiding confusion for businesses and individuals that conduct cross-border commerce.
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A mantra explains why your company, product, or service exists. Ideally, how many words should a mantra be?
Ten
Three or Four
About One Hundred
It does not matter
A mantra explains why your company, product, or service exists. Ideally, a mantra should be three or four words.
A mantra is a succinct phrase that sums up the essence of your company, product, or service. Mantras can be used in a variety of ways, such as slogans, taglines, or mission statements. Mantras may also be used to differentiate between businesses, products, or services. The power of a mantra comes from its ability to convey a clear and concise message. A good mantra must be memorable, catchy, and easy to remember.
Because a mantra serves as a foundation for all of your marketing efforts, it should be simple enough to be used across all channels. A mantra should also be meaningful and relevant to your target audience.
This can be achieved by understanding your customer's needs, wants, and desires. It should be a reminder to customers of what you stand for, the difference you offer, and how you can solve their problems.
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Review the SWOT analysis you completed for your organization in MHA/505. Applying your knowledge of economic principles, analyze how economic concepts impact the opportunities or threats facing your organization.
Write a 500-word report of your organization’s SWOT and how economics in your market impact the strategy and future of your organization. Include the following:
Summarize the major economic trends in your market.
Evaluate whether these trends benefit or harm your organization’s strategic goals. Provide a rationale for your response.
Evaluate whether the economy in your market presents opportunities or threats for your organization or both. Describe them and how they apply to your organization.
The economy in the market presents both opportunities and threats for the organization, and it will need to carefully consider economic concepts such as supply and demand, competition, and consumer behavior when developing its strategy for the future.
The SWOT analysis that I did for my organization in MHA/505 showed that it has many strengths, including a highly skilled workforce, strong brand recognition, and a diverse product line. Weaknesses identified include a lack of international market presence and reliance on a small number of suppliers. The organization also faces significant opportunities, such as growing demand for its products in emerging markets, and potential threats, such as increased competition from other companies.
The major economic trends in the market are the growing popularity of online shopping and the increasing importance of sustainability and social responsibility. These trends have both positive and negative implications for the organization. On one hand, online shopping allows the organization to reach more customers and reduce costs. On the other hand, it creates more competition and could decrease foot traffic to brick-and-mortar stores.
Similarly, the emphasis on sustainability and social responsibility creates opportunities for the organization to differentiate itself and appeal to socially conscious customers, but it also creates a potential threat if the organization fails to meet these expectations.
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Tim has decided on a budget of no more than $20 to spend at the casino. After the first few rounds at the slot machines, he wins $100. Now, he decides to use all his winnings to continue playing. Select the correct answer below: 1) For Tim dollars are fungible. 2)This is an example of mental accounting. 3)This shows that Tim is loss averse. 4) all of the above
The answer to the question is an option (2) which is an example of mental accounting.
Tim has decided on a budget of no more than $20 to spend at the casino. After the first few rounds at the slot machines, he wins $100. Now, he decides to use all his winnings to continue playing.
Mental accounting is an example of cognitive bias. Mental accounting occurs when people treat their financial resources as separate from others. They segregate their money into various categories, each with its criteria, depending on how it was obtained or how it will be spent. This concept could be applied in various situations, such as personal finances or gambling.
Tim's decision to use all of his winnings to continue playing at the casino shows that he is using mental accounting. He has mentally separated his original $20 budget from the $100 that he won and has created a new budget with the $100. Instead of leaving the casino and keeping his winnings, he's spending all of his money on gambling again. Therefore, this is an example of mental accounting.
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apple invested $10,495 in the current year to expand its manufacturing capacity. assume that these assets have a 10-year life and generate net cash flows of $3,000 per year, and that apple requires a 7% return on its investments. (apple $s in millions.) (pv of $1, fv of $1, pva of $1, and fva of $1) (use appropriate factor(s) from the tables provided.)
The present value of the investment is $99,482
Apple invested $10,495 in the current year to expand its manufacturing capacity. Assume that these assets have a 10-year life and generate net cash flows of $3,000 per year, and that Apple requires a 7% return on its investments.
In order to determine the present value (PV) of this investment, the present value of an annuity (PVA) table will be used. The PVA of $1 at 7% for 10 years is 6.246. So, PV of an annuity of $3,000 for 10 years at 7% = $18,738.
On the other hand, PV of a single sum (PV) table will be used to calculate the present value of the initial investment.
The present value (PV) of $1 at 7% for 10 years is 0.508.
Therefore, the present value of the initial investment is $5,319.
Multiplying the present value of the investment ($5,319) by the present value of the annuity ($18,738) results in $99,482.
Hence, the present value of the investment is $99,482, using appropriate factor(s) from the tables provided.
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Phil's Carvings wants to have a Weighted Average Cost of Capital
of 9.50 percent. The firm has an after-tax cost of debt of 6.5
percent and a cost of equity of 12.75 percent. What Debt-Equity
ratio is
To calculate the debt-equity ratio that would result in a Weighted Average Cost of Capital (WACC) of 9.50 percent for Phil's Carvings, we need to find the optimal combination of debt and equity.
The WACC is a weighted average of the cost of debt and the cost of equity, where the weights are determined by the proportion of debt and equity in the company's capital structure.
Let's assume that the debt-equity ratio is represented by D/E. The weights of debt and equity in the WACC calculation would be D/(D + E) and E/(D + E), respectively.
Given that the after-tax cost of debt is 6.5 percent and the cost of equity is 12.75 percent, we can set up the equation for WACC:
WACC = (D/(D + E)) * Cost of Debt + (E/(D + E)) * Cost of Equity
0.095 = (D/(D + E)) * 0.065 + (E/(D + E)) * 0.1275
Simplifying the equation, we get:
0.095 = 0.065D + 0.1275E
Since D + E = 1 (representing the total capital), we can substitute 1 - D for E:
0.095 = 0.065D + 0.1275(1 - D)
0.095 = 0.065D + 0.1275 - 0.1275D
0.095 - 0.1275 = -0.0625D
-0.0325 = -0.0625D
D = -0.0325 / -0.0625
D = 0.52
Therefore, the debt-equity ratio required to achieve a WACC of 9.50 percent is approximately 0.52. This means that Phil's Carvings should have a debt-equity ratio of 0.52 to optimize its capital structure and achieve the desired WACC.
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Getty Company expects sales for the first three months of next year to be $195,000, $235,000 and $320,000, respectively. Getty expects 50 percent of its sales to be cash and the remainder to be credit sales. The credit sales will be collected as follows: 10 percent in the month of the sale and 90 percent in the following month. Compute a schedule of Getty's cash receipts for the months of February and March.
Given Information Getty Company expects sales for the first three months of next year to be $195,000, $235,000, and $320,000 respectively. Getty expects 50% of its sales to be cash and the remainder to be credit sales.
The credit sales will be collected as follows: 10% in the month of the sale and 90% in the following month. To Compute a schedule of Getty's cash receipts for the months of February and March. Solution Calculation of Cash Sales Sales in February = $235,000 Sales in March = $320,000 Cash Sales = 50% of Sales in February + 50% of Sales in March Cash Sales = 0.5 * $235,000 + 0.5 * $320,000 = $277,500Sales on Credit Sales on Credit in February = 50% of Sales in February = 0.5 * $235,000 = $117,500 Sales on Credit in March = 50% of Sales in March = 0.5 * $320,000 = $160,000Collections of Cash in February The cash collections in February comprise of two components: Cash collections from cash sales Cash collections from credit sales made in January 10% of the credit sales made in February Collections from Credit Sales made in January Total Credit Sales made in January = 50% of Sales in January = 0.5 * $195,000 = $97,50010% of the credit sales made in January would be collected in February = 0.1 * $97,500 = $9,750
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the modified approach to accounting for infrastructure assets may be utilized by a state or local government if: the government accumulates information about all infrastructure assets within either a network or subsystem of a network. the government capitalizes infrastructure assets. the government expenses costs of maintaining the infrastructure assets. the government chooses to depreciate its infrastructure assets. group of answer choices ii and iii. i, ii, and iv. i and ii. i, ii, iii, and iv. i, ii, and iii.
The modified approach to accounting for infrastructure assets may be utilized by a state or local government if they follow options i, ii, and iii.
The modified approach to accounting for infrastructure assets, also known as the modified approach under Governmental Accounting Standards Board (GASB) Statement No. 34, allows a state or local government to capitalize and depreciate their infrastructure assets. This approach can be utilized if the government satisfies the following conditions:
i. The government accumulates information about all infrastructure assets within either a network or subsystem of a network. This means that the government must gather and maintain comprehensive data on all infrastructure assets within a specific network or subsystem, such as roads, bridges, utilities, etc.
ii. The government capitalizes infrastructure assets. Capitalizing means that the government recognizes the infrastructure assets as long-term assets on their financial statements. This includes recording the initial acquisition or construction costs and subsequent improvements.
iii. The government expenses costs of maintaining the infrastructure assets. This means that the government recognizes the ongoing costs associated with maintenance, repairs, and operating expenses as expenses in the accounting period incurred.
To utilize the modified approach to accounting for infrastructure assets, a state or local government must comply with options i, ii, and iii. This approach enables them to accurately track, report, and account for their infrastructure assets in a systematic manner, providing transparency and accountability in financial reporting.
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When you compose a message, you want your audience to find the information it needs quickly and to understand it. Your message should be easy to read and comprehend. Strategic use of white space improves document readability. Which of the following techniques employ white space? Check all that apply. Using bulleted and numbered lists Using headings Using justified alignment Breaking paragraphs into shorter chunks Margins determine the reading area of a document. Complete the following sentence about margins and alignment with the best choices. Business letters and memos usually have margins of and are usually on the left. Typeface, font, and size influence how your message is read. Review the selection, and determine whether the following statement about typeface and font is true or false. A WIDE variety of typefaces are available for business writers. Different typefaces suggest different purposes and occasions. True or False: Font styles are a mechanical means of adding emphasis to your words. True False Headings are important for visual impact and readability. Which of the following sentences about headings are true? Check all that apply. Headings often appear in business reports. Headings should not be used in formal documents. Headings increase the skim value of a message. Read the following sentence, and determine which technique is most applicable to improve its readability. The letters you send to clients must be precise, stated with clarity, and utilize an economy of language. Eliminating compound prepositions Using numbered or bulleted lists Developing parallelism for balance Choose the heading that is best at highlighting information and improves readability. The Truth About ABC Corp. Profitability Financial Analysis of ABC Corp.
The techniques that employ white space include:
Using bulleted and numbered listsUsing headingsBreaking paragraphs into shorter chunksMargins determine the reading area of a document. Complete the following sentence about margins and alignment with the best choices:
Business letters and memos usually have margins of standard width (usually 1 inch) and are usually aligned on the left.
The statement about typeface and font is true:
A wide variety of typefaces are available for business writers. Different typefaces suggest different purposes and occasions.
Font styles are a mechanical means of adding emphasis to your words. Therefore, the statement is true.
Regarding headings, the following sentences are true:
Headings often appear in business reports.Headings increase the skim value of a message.To improve the readability of the sentence "The letters you send to clients must be precise, stated with clarity, and utilize an economy of language," the technique most applicable is:
Developing parallelism for balance.
The heading that is best at highlighting information and improving readability is:
Financial Analysis of ABC Corp.
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Given the two person general sum transferable utility game (A, B) where = 82 49 41 /51 48 70 70 64 A = 28 54 49 and B = 31 39 95/ 50 \64 26 41. a) Check whether there are any pure strategic equilibria points. If exist, determine whether these points are stable or not. b) Find safety levels of players. c) Determine the pure strategies which result in maximum total payoff. If they agree to play with these strategies, how do they share the total payoff, assuming that they are not aware of 'threat strategies' (disagreement strategies) and they ignorantly act on the basis of safety levels. d) Determine how the total payoff, mentioned in previous part, should be shared among the players, based on their threat strategies.
In the given two-person general sum transferable utility game, we analyze several aspects. Firstly, we check for pure strategic equilibria points and determine their stability. Then, we find the safety levels of the players. Next, we identify the pure strategies that result in the maximum total payoff and discuss how the players would share the total payoff, assuming they are not aware of threat strategies and act based on their safety levels. Lastly, we consider the sharing of the total payoff based on the players' threat strategies, although the question does not provide information about the threat strategies.
In this game, there are no pure strategic equilibria points where neither player can unilaterally improve their payoff. As a result, there are no stable equilibria points.
Player A's safety level is 41, which means they can guarantee a minimum payoff of 41 regardless of the opponent's strategy. Player B's safety level is 26, which is their minimum guaranteed payoff.
The pure strategies that result in the maximum total payoff are A's strategy of 49 and B's strategy of 95. If they agree to play with these strategies, the total payoff would be 144. However, assuming they are not aware of threat strategies and act based on their safety levels, A would receive 41 (their safety level) and B would receive 26 (their safety level).
Sharing the total payoff based on the players' threat strategies cannot be determined without information about their specific threat strategies. Therefore, we cannot determine how the total payoff would be shared among the players in this case.
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1) Most economies are experiencing central economic problems post pandemic.
a) Over the past few years Oman has experienced central problems of economy, list out the possible reason for the same and currently what is the situation of Oman economy explain in detail.
b) Currently we are experiencing war between Rassia and Ukrain, what are the economic impact of the war on world economy? Explain in detal.
c) Explain the main causes and consequences of inflation and discuss G.C.C. Countries experience with controlling inflation
a) Oman’s economy has suffered due to a lack of oil reserves, low global oil prices, and weak private sector growth. To alleviate the situation, Oman has implemented economic reforms, including the creation of a new tax system, privatization of some sectors, and diversification of the economy.
b) The economic impact of the war between Russia and Ukraine on the world economy is significant. The war has led to economic sanctions against Russia by Western countries, causing a decline in Russia’s exports and economic growth. Additionally, Ukraine’s economy has been negatively impacted by the war, with a decline in exports and foreign investment. The conflict has also caused a decline in trade between Russia and other countries, leading to a slowdown in the global economy.
c) Inflation is caused by an increase in the money supply or a decrease in the supply of goods and services. The consequences of inflation include a decrease in purchasing power, a decrease in investment, and an increase in the cost of living. GCC countries have experienced inflation due to an increase in government spending, high oil prices, and a lack of economic diversification.
In conclusion, the economic problems faced by Oman, the impact of the war between Russia and Ukraine on the world economy, and the causes and consequences of inflation and GCC countries' experiences with controlling inflation have been discussed. These issues demonstrate the importance of economic stability, diversification, and effective policy measures to mitigate economic risks.
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Think of a self-service environment or a self-service task such as checking out your products in a supermarket by yourself instead of a cashier.
Analyze how the design dimensions guide you through the service process.
Questions
Q. What do you find most effective for you and why? Q. What seems least effective and why (4points)
Q. How could that environment be improved and why? Subject: Marketing Services and Experiences
In a self-service environment like checking out products in a supermarket without the assistance of a cashier, several design dimensions guide customers through the service process.
These dimensions play a crucial role in shaping the customer experience and determining its effectiveness. Let's analyze them in the context of a self-checkout system.
Accessibility: The self-checkout area should be easily accessible, with clear signage and ample space for customers to maneuver. It should be strategically located within the store, ensuring convenience and minimizing customer effort.
Clarity: Clear instructions and visual cues are essential in guiding customers through the self-checkout process. Well-designed user interfaces, intuitive touchscreens, and step-by-step prompts can help customers navigate the system efficiently.
Efficiency: Customers appreciate a self-checkout system that is quick and efficient. The design should minimize wait times, ensure fast scanning and payment processes, and provide instant feedback on successful transactions.
Reliability: The self-service system must be reliable and error-free. It should accurately scan and register products, handle different payment methods securely, and minimize technical glitches or system failures that can frustrate customers.
Security: Ensuring the security of customer transactions is crucial. The design should incorporate measures such as surveillance cameras, anti-theft mechanisms, and secure payment processing to build trust and confidence in the self-service environment.
Assistance: Although self-service is intended to be independent, it's important to have readily available assistance for customers who may face difficulties or have questions. Design elements like clear help buttons or visible staff members can provide support when needed.
Q. What do you find most effective for you and why?
A. Personally, I find clarity and efficiency to be the most effective design dimensions in a self-checkout system. Clear instructions and user-friendly interfaces make it easy to navigate through the process without confusion. Additionally, when the system is efficient, with quick scanning and payment options, it saves time and reduces waiting, making the overall experience more satisfying.
Q. What seems least effective and why (4 points)?
A. The following are four aspects that can be less effective in a self-checkout environment:
Lack of human interaction: Some customers may prefer the personal interaction and assistance provided by human cashiers. Self-checkout systems can feel impersonal and may not address specific customer needs or concerns.
Complexity in handling non-standard items: Self-checkout systems may struggle with non-standard items such as produce, bulk items, or items without barcodes. The system may require manual input or verification, which can be time-consuming and prone to errors.
Insufficient error handling: When errors occur during the self-checkout process, the system should provide clear and helpful error messages to guide customers on how to resolve the issue. Inadequate error handling can lead to frustration and confusion.
Limited payment options: Self-checkout systems may not support a wide range of payment options, potentially excluding customers who prefer alternative payment methods. Offering diverse payment choices, including mobile payments and digital wallets, can enhance the effectiveness of the system.
Q. How could that environment be improved and why?
A. To improve the self-checkout environment, several measures can be considered:
Enhanced user interfaces: Designing user interfaces that are even more intuitive, user-friendly, and visually appealing can make the self-checkout process smoother and more engaging.
Improved error handling: Providing clear and specific error messages with suggestions for resolution can help customers address issues independently, reducing frustration and improving the overall experience.
Intelligent recognition systems: Investing in advanced scanning technologies that can accurately identify and register non-standard items, such as produce or bulk items, can streamline the checkout process and reduce the need for manual intervention.
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A machine costing $209,200 with a four-year life and an estimated $18,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 478,000 units of product during its life. It actually produces the following units: 123,000 in 1st year, 124,100 in 2nd year, 121,200 in 3rd year, 119,700 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.)
The book value of the machine at the end of year 4, if the company uses straight-line depreciation and does not depreciate the machine below its salvage value, will be $18,000.
GivenData:
Cost of the machine = $209,200
Salvage value = $18,000
Life of machine = 4 years
total estimated production of machine = 478,000
Units of products produced in the 1st year = 123,000
Units of products produced in the 2nd year = 124,100
Units of products produced in the 3rd year = 121,200
Units of products produced in the 4th year = 119,700
We have to calculate the following things: Depreciation expense per year using the Straight Line Depreciation Method. Total depreciation expense accumulated over the 4 years life of the machine. Book value of the machine at the end of year 4, if the company uses straight-line depreciation and does not depreciate the machine below its salvage value.Solution:
Calculation of Depreciation expense per year:
Depreciation expense is calculated as follows:
Depreciation expense = (Cost of the asset – Salvage value) / Useful life of the asset
Depreciation expense = ($209,200 – $18,000) / 4
Depreciation expense = $48,050 per year
Calculation of the total depreciation expense:
The total depreciation expense over the 4 years is calculated as follows:
Total Depreciation expense = Depreciation expense per year x Useful life of the asset
Total Depreciation expense = $48,050 x 4Total Depreciation expense = $192,200
Calculation of the book value of the machine at the end of year 4:
The book value of the machine at the end of year 4 is calculated as follows:
Book value = Cost of the machine – Accumulated depreciation expense book value of the machine at the end of year 4 = $209,200 – $192,200
Book value of the machine at the end of year 4 = $17,000
Since the machine must not be depreciated below its estimated salvage value, the minimum book value that the machine can have is $18,000.
Therefore, the book value of the machine at the end of year 4, if the company uses straight-line depreciation and does not depreciate the machine below its salvage value, will be $18,000.
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What can be concluded if a country is already in deficit and accumulating more debt every year while its output is greater than potential output and its economic growth is greater than real interest rate?
When a country is already in deficit and accumulating more debt every year while its output is greater than potential output and its economic growth is greater than real interest rate, it can be concluded that the government of that country is spending more than it earns in revenue.
When the government incurs a budget deficit, it borrows money by issuing bonds or other debt securities to finance its spending. If the country is already in deficit and accumulating more debt every year, it means that the government is increasing its outstanding debt burden.
However, it is also important to note that economic growth is being observed, which means that there are opportunities for future revenue generation. However, it is likely that this growth is being funded by deficit spending, which could lead to a situation where the government's outstanding debt burden grows to unsustainable levels.
Additionally, if the real interest rate is less than the growth rate of the economy, it means that the government can borrow money at a lower interest rate than the rate at which the economy is growing. This could lead to a situation where the government can continue to finance its spending without incurring significant additional debt.
Overall, if a country is in deficit and accumulating more debt every year while its output is greater than potential output and its economic growth is greater than real interest rate, it could be an indication that the government is spending beyond its means and may need to take steps to reduce its spending or increase its revenue.
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In a closed economy, the MPC is 0.80. Government spending changes by - 400. The change in equilibrium GDP is
In a closed economy, the MPC is 0.80. Government spending changes by - 400. The change in equilibrium GDP is the main answer.
There is a relationship between government spending and equilibrium GDP (gross domestic product) in an economy. The marginal propensity to consume (MPC) is the ratio of the change in consumption spending to a change in disposable income. It measures how much of a change in income goes toward consumption.
In this case, it is - 400.1/1 - MPC is the multiplier, which measures the total change in GDP resulting from a change in spending. The multiplier can be calculated as follows: Multiplier = 1/1 - MPC = 1/1 - 0.80 = 1/0.20 = 5This means that a $1 change in spending will result in a $5 change in GDP. Therefore, the change in equilibrium GDP is:ΔGDP = - 400 × 5 = - 2000The change in equilibrium GDP is - 2000.
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: FarCry Industries, a maker of telecommunications equipment, has 5 million shares of common stock outstanding, 2 million shares of preferred stock outstanding, and 20,000 bonds. Suppose the common shares sell for $26 per share, the preferred shares sell for $14.00 per share, and the bonds sell for 97 percent of par. What weight should you use for preferred stock in the computation of FarCry's WACC? (Round your answer to 2 decimal places.) Weight used %
Weight used for preferred stock in the computation of FarCry's WACC = 0.16.
WACC stands for Weighted Average Cost of Capital. It is a financial metric that is used to determine the cost of capital that a firm should expect to pay on average. In this case, we are asked to calculate the weight that should be used for preferred stock in the computation of FarCry's WACC.
Therefore, let us calculate the weight as follows:
Weight used for preferred stock in the computation of FarCry's WACC = (Total amount invested in preferred stock) / (Total amount invested in all capital)
Now, let us calculate the amount invested in preferred stock:
Amount invested in preferred stock = (Number of preferred shares outstanding) x (Price of preferred stock)Amount invested in preferred stock
= 2,000,000 x $14.00
Amount invested in preferred stock = $28,000,000
Now, let us calculate the total amount invested in all capital:
Total amount invested in all capital = (Amount invested in common stock) + (Amount invested in preferred stock) + (Amount invested in bonds)Amount invested in common stock = (Number of common shares outstanding) x (Price of common stock)Amount invested in common stock
= 5,000,000 x $26
Amount invested in common stock = $130,000,000
Amount invested in bonds = (Number of bonds outstanding) x (Price of bonds) x (97%)Amount invested in bonds = 20,000 x $1,000 x 0.97
Amount invested in bonds = $19,400,000Total amount invested in all capital = $130,000,000 + $28,000,000 + $19,400,000
Total amount invested in all capital = $177,400,000
Therefore, Weight used for preferred stock in the computation of FarCry's WACC = (Total amount invested in preferred stock) / (Total amount invested in all capital)Weight used for preferred stock in the computation of FarCry's WACC = $28,000,000 / $177,400,000
Weight used for preferred stock in the computation of FarCry's WACC = 0.16
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-Unlike the HPR and ROI, the NPV-or DCF method-takes the time value of money into consideration. A. True B. False 2-If the NPV is positive, a project is not worth pursuing since it is not value-adding. A. True B. False 3-If the NPV is positive, a project is worth pursuing since it is: A. Value-adding B. Value-destroying C. Location: D. All of the above
1. NPV (Net Present Value) - TRUE ;2 TRUE . 3 TRUE. .Option D, All of the above, best suits question three.
1. The statement "Unlike the HPR and ROI, the NPV-or DCF method-takes the time value of money into consideration" is True.
NPV (Net Present Value) and DCF (Discounted Cash Flow) methods are the two most commonly used capital budgeting methods. The Net Present Value (NPV) method determines the present value of future cash flows by considering the time value of money.
2. The statement "If the NPV is positive, a project is worth pursuing since it is Value-adding" is True.
If the NPV is positive, it implies that the present value of the expected cash inflows exceeds the present value of the expected cash outflows. In this scenario, the project should be pursued because it has the potential to generate a profit or add value to the company.
3. The statement "If the NPV is positive, a project is worth pursuing since it is Value-adding" is correct.
Therefore, option D, All of the above, is that best suits question three.
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You are the bookkeeper for a new small company that provides cricket training. As the bookkeeper, you have been given a list of 10 transactions that occurred during December. The owners have asked you to provide them with Financial Statements. Now, we need to determine the effect of the 10 transactions and create Financial Statements that accurately represent the financial position of the company.
The financial statements are vital tools in evaluating the financial performance of a company. It comprises a balance sheet, income statement, and cash flow statement. Financial statements are generated from business transactions.The following 10 transactions occurred during December:1.
Owner invested $5,000 into the business in exchange for common stock.2. Purchased equipment for $2,000 with cash.3. The company received $1,500 in cash from customers for services provided.4. The company paid $600 in cash for rent for the month of December.5. Received $800 in cash for services to be provided in the future.6. Purchased $200 of supplies on credit.7. The company provided $750 of services to a customer on credit.
8. The company paid a $300 electric bill in cash.9. The company collected $500 in cash from a customer on credit.10. Paid $100 on the supplies that were purchased on credit.Based on these transactions, the company's financial statements can be computed. The following are the financial statements of the company as of the end of December: Balance Sheet Assets Liabilities Owner’s equityTotalAssets$2,000$200$1,800$2,000Income Statement Revenue Expenses Net Income$2,300$900$1,400Cash Flow Statement Cash from operating activities$800The financial position of the company at the end of December has been accurately represented in the financial statements.
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A stock just paid an annual dividend of $6.2. The dividend is expected to grow by 2% per year for the next 4 years. In 4 years, the P/E ratio is expected to be 20 and the payout ratio to be 60%.
The required rate of return is 8%.
What is the intrinsic value of the stock?
The intrinsic value of the stock is $79.00. The intrinsic value of the stock can be calculated using the Dividend Discount Model (DDM). The DDM formula for a stock with a constant growth rate in dividends is:
Intrinsic Value = Dividend / (Required Rate of Return - Dividend Growth Rate)
First, let's calculate the future dividends for each of the next 4 years. We will use the dividend growth rate of 2% per year:
Year 1 dividend: $6.2 * (1 + 0.02) = $6.32
Year 2 dividend: $6.32 * (1 + 0.02) = $6.44
Year 3 dividend: $6.44 * (1 + 0.02) = $6.57
Year 4 dividend: $6.57 * (1 + 0.02) = $6.70
Now we can calculate the intrinsic value using the DDM formula:
Intrinsic Value = ($6.32 / (0.08 - 0.02)) + ($6.44 / (0.08 - 0.02)) + ($6.57 / (0.08 - 0.02)) + ($6.70 / (0.08 - 0.02))
Intrinsic Value = $79.00
Therefore, the intrinsic value of the stock is $79.00.
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Assume equations 1 and 2 below were estimated from the data gathered that will represent the demand and supply functions respectively of an individual buyer and seller respectively for product X. = Qdx 65,000 – 11.25Px + 15Py – 3.751 + 7.5A Qsx = 7,500 + 14.25Px – 15P, – 3.75C Eq. 1 Eq. 2 = where Px – price of product X; Py - price of product Y; I average consumer's income; A. advertising expenditure; Pz - price of product Z; and C - cost of production. Use the following additional information: the price of a related product, Y, is P41.25; the average consumer's income is P12,000; advertising expenditure is P2,500; the price of product Z is P90; and the cost of production is P1,200. There are 30 identical buyers and 50 identical sellers in the market for product X. D. Using the market demand function, what is Py that will make all the buyers stop purchasing this product? Round-up to two decimals. E. What is the interpretation of the parameter a of the market demand function? F. What is the interpretation of the parameter b of the market demand function? G. What is the interpretation of the parameter d of the market supply function? H. What is the market price of product X? Round-up to two decimals. I. What is the equilibrium quantity in this market? J. What is the price range that will result to a surplus in the market? K. What is the price range that will result to a shortage in the market? If the government will intervene in this market and imposes that the minimum price will be 20% more than the market price, L. How much would be the quantity demanded? Round-up to two decimals. M. How much would be the quantity supplied? Round-up to two decimals. N. From L and M, what is the condition in the market? Explain concisely. X If the new supply equation will be Qs'x = 26,250 + 712.50P', 0. What would be the new equilibrium price (round-up to two decimals)? P. How many of this product will be bought and sold at this new market price? Round-up to two decimals. Q. What is the specific reason for this change in supply?
D. Py that will make all the buyers stop purchasing this product can be calculated using the demand function equation and keeping [tex]Qdx = 0[/tex].
This is because if buyers stop purchasing, then Qdx will be 0.
[tex]Qdx =[/tex] [tex]65,000 - 11.25Px + 15(Py) - 3.75(12,000) + 7.5(2,500) - 3.75(90) + 1,200*30 = 0[/tex]
H. [tex]Qdx = Qsx[/tex], and solving for Px.
[tex]Px = [7,500 + 14.25Px - 15(41.25) - 3.75(1,200)]/(2*50) = 37.50 + 0.15Px.[/tex] [tex]Px = 44.12.[/tex]
I. The equilibrium quantity in this market can be obtained by substituting Px in either the demand or supply function.
[tex]Qx = Qdx = 65,000 - 11.25(44.12) + 15(41.25) - 3.75(12,000) + 7.5(2,500) - 3.75(90) + 1,200*30 = 82,662[/tex].
L. The quantity demanded after the government intervention can be obtained by equating the demand function equation and keeping Px = 20% more than the market price (P44.12).
[tex]Qdx = 65,000 - 11.25(1.20*44.12) + 15(41.25) - 3.75(12,000) + 7.5(2,500) - 3.75(90) + 1,200*30 = 70,378.10.[/tex]
M. The quantity supplied after the government intervention will be the same as before, i.e.
[tex]30*(7,500 + 14.25(44.12) - 15(90) - 3.75(1,200)) = 157,500.[/tex]
X. The new equilibrium price can be obtained by equating the new demand function and the new supply function,
[tex]Qs'x = Qdx. 26,250 + 712.50P' = 65,000 - 11.25P' + 15(41.25) - 3.75(12,000) + 7.5(2,500) - 3.75(90) + 1,200*30.[/tex]
This gives[tex]P' = 38.23.[/tex]
P. The quantity demanded and supplied at the new market price of [tex]P38.23[/tex] can be obtained by substituting it in either of the demand or supply functions.
[tex]Qx = Qdx = 65,000 - 11.25(38.23) + 15(41.25) - 3.75(12,000) + 7.5(2,500) - 3.75(90) + 1,200*30 = 85,620.47.[/tex]
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When A Corporation Is Formed, How Do The Transaction Costs Get Treated? A. Recorded As An Asset And Depreciated B. Recorded As An Asset And Assessed For Impairment C. Expensed Immediately D. Recorded Directly To Retained Earnings
When a corporation is formed, how do the transaction costs get treated?
a.
recorded as an asset and depreciated
b.
recorded as an asset and assessed for impairment
c.
expensed immediately
d.
recorded directly to retained earnings
Transaction costs are regarded as "C. Expensed immediately" when a corporation is created.
Transaction costs are charges experienced by a business while obtaining money, whether through the issuance of bonds, stocks, or the purchase of another business. The following are examples of transaction costs: Legal fees associated with the issuance of stocks underwriting fees Accountants’ fees Registration and filing fees Printing expenses The expense of these costs is recorded in the income statement as a one-time charge under the Accounting Standards Codification (ASC) 720, which specifies that the costs be considered a period expense in the year they are incurred.
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Spring Flower Company is to give quote.
Export of 2000 cases of canned mushrooms from Nanjing to Shanghai for loading on ship then shipping directly to Los Angeles, U.S.A..
The domestic purchase cost of each case of canned mushrooms is 300 RMB, The domestic shipping cost is RMB 8,000 and other costs (including export customs clearance) total RMB 5,000. The total shipping cost from Shanghai to Los Angeles is USD 10,000, the freight insurance is USD 3,000. The port of shipment is Shanghai, and the destination port is Los Angeles.
With an expected profit margin of 10%, please calculate the USD quote per case by Spring Flower Trading Company for FOB,CIF and write a complete quote in English. (Exchange rate 1 USD = 6.70 RMB)
Spring Flower Trading Company offers a CIF quote of 52.25 USD per case for the export of 2000 cases of canned mushrooms from Nanjing to Shanghai, for loading on a ship and shipping directly to Los Angeles
To calculate the USD quote per case, we need to consider the costs and profit margin. Let's break down the calculation for each term: FOB and CIF.
FOB (Free On Board) Quote:
FOB quote includes the cost of the goods and domestic shipping charges. It does not include the international shipping costs or insurance.
a. Cost of goods:
Each case of canned mushrooms costs 300 RMB. The total cost of 2000 cases would be: 300 RMB/case * 2000 cases = 600,000 RMB.
b. Domestic shipping cost:
The domestic shipping cost is given as 8,000 RMB.
c. Other costs:
The additional costs, including export customs clearance, amount to 5,000 RMB.
d. Total cost:
The total cost for the FOB quote is: Cost of goods + Domestic shipping cost + Other costs = 600,000 RMB + 8,000 RMB + 5,000 RMB = 613,000 RMB.
e. Profit margin:
The expected profit margin is 10%. Therefore, the profit would be 10% of the total cost: 0.10 * 613,000 RMB = 61,300 RMB.
f. Conversion to USD:
Using the given exchange rate of 1 USD = 6.70 RMB, we can convert the total cost and profit to USD:
Total cost in USD = 613,000 RMB / 6.70 = 91,492.54 USD (rounded to two decimal places).
Profit in USD = 61,300 RMB / 6.70 = 9,164.18 USD (rounded to two decimal places).
g. FOB quote per case:
The FOB quote per case can be calculated by dividing the total cost (in USD) by the total number of cases (2000 cases):
FOB quote per case = Total cost in USD / Number of cases = 91,492.54 USD / 2000 cases = 45.74 USD/case (rounded to two decimal places).
Therefore, the FOB quote in English by Spring Flower Trading Company would be:
"Spring Flower Trading Company offers a FOB quote of 45.74 USD per case for the export of 2000 cases of canned mushrooms from Nanjing to Shanghai, for loading on a ship and shipping directly to Los Angeles, U.S.A."
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