WACC (weighted average cost of capital) is the weighted average of the capital costs of a firm's various capital components, such as equity, debt, and preferred stock. As per the given data, the value of WACC can be calculated as follows:
Cost of equity (ke) = rf + β [E(rm) - rf]
Where,
rf = Required return on debt (yield to maturity on a long-term bond) = 4.5%β = Beta = 1.4E(rm) = Expected return on the market, and it can be calculated as follows:
E(rm) = Risk-free rate + Market risk premium
E(rm) = 3.1% + 5%E(rm) = 8.1%
Cost of equity (ke) = 4.5% + 1.4 [8.1% - 4.5%] = 10.02%
Cost of debt (kd) = 4.5% × (1 - 21%) = 3.555% (tax adjusted)
WACC = (E / V) × ke + (D / V) × kd × (1 - Tc)
Where, E = Market value of the firm's equity = 95 × $18 = $1,710
M D = Market value of the firm's debt = $883
M V = E + D = $1,710M + $883M = $2,593M Tc = Tax rate = 21%
Putting the values, WACC= ($1,710M / $2,593M) × 10.02% + ($883M / $2,593M) × 3.555% × (1 - 21%)WACC = 7.46% + 1.66% = 9.12%
Therefore, the value of WACC is 9.12%.
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You plan to purchase a house for $175,000 using a 10 -year mortgage obtained from your local bank. You will make a down payment of 20 percent of the purchase price. You will not pay off the mortgage early. Assume the homeowner will remain in the house for the full term and ignore taxes in your analysis. a. Your bank offers you the following two options for payment. Which option should you choose? b. Your bank offers you the following two options for payment. Which option should you choose?
The variable interest rate in Option 2 is likely to increase over time, resulting in higher monthly payments compared to Option 1 and Option 1 with the fixed interest rate of 4% would be the better choice.
a. To determine which option you should choose, let's calculate the total cost of each option.
Option 1: The bank offers a fixed interest rate of 4% on a 10-year mortgage. With a 20% down payment, the loan amount would be $140,000 ($175,000 - 20%).
Using the formula for the monthly mortgage payment, we can calculate the monthly payment for Option 1. The formula is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n - 1 ]
Where:
M = Monthly payment
P = Loan amount
i = Monthly interest rate
n = Total number of payments
For Option 1, plugging in the values:
P = $140,000
i = 4% / 12 = 0.00333 (monthly interest rate)
n = 10 years * 12 months/year = 120 (total number of payments)
Now, calculate M for Option 1.
Option 2: The bank offers a variable interest rate that starts at 3% for the first 5 years and then adjusts every year.
Since we don't have information about the subsequent interest rates, it's difficult to calculate the exact monthly payment for Option 2. However, it is likely that the variable interest rate will increase over time, leading to higher monthly payments compared to Option 1.
Therefore, based on the information provided, Option 1 with the fixed interest rate of 4% would be the better choice.
b. Option 1 with the fixed interest rate of 4% would still be the better choice, as explained in part a.
Therefore, the variable interest rate in Option 2 is likely to increase over time, resulting in higher monthly payments compared to Option 1.
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which type of scaled data can be arranged in order even if the
difference between data values cannot be determined or are
meaningless
nominal
ordinal
interval
ratio
The type of scale data that can be arranged in order even if the difference between data values cannot be determined or are meaningless is ordinal data.
Ordinal data is a type of scaled data where the categories or variables can be arranged in a specific order or rank, but the difference between the values may not be meaningful or quantifiable. In other words, ordinal data allows for the establishment of a relative order or hierarchy among the categories, but the intervals between the categories may not have consistent or meaningful differences.
For example, in a survey asking participants to rate their satisfaction level with a product on a scale of "very unsatisfied," "unsatisfied," "neutral," "satisfied," and "very satisfied," the responses can be ordered from least to most satisfied. However, the difference between "unsatisfied" and "neutral" may not necessarily be the same as the difference between "satisfied" and "very satisfied." The ordering of the categories provides a sense of preference or rank, but the intervals between them are not necessarily uniform or quantifiable.
In contrast, interval and ratio data allow for meaningful measurement of the differences between values, with ratio data having a true zero point and interval data lacking a true zero but still allowing for meaningful comparisons of differences.
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4. (8 pts) Find the future value of a savings account that was opened with $2000 at 1.5% compounded semi-annually for 6 years.
Given that the savings account was opened with $2000 at 1.5% compounded semi-annually for 6 years. We need to find the future value of the savings account.Solution
Here, Principal = $2000 Rate of interest = 1.5%Compounding frequency = semi-annually Number of years = 6 Formula used FV = P × (1 + r/n)^(nt)Where,P is the principal,r is the rate of interest n is the number of times interest is compounded per year,t is the number of years FV is the future value of the account Putting the values in the above formula, we get,FV = P × (1 + r/n)^(nt)FV = $2000 × (1 + 0.015/2)^(2 × 6)FV = $2000 × (1.0075)^(12)FV = $2000 × 1.095FV = $2190 Therefore, the future value of the savings account is $2190. Answer: $2190
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is attempting to determine costs associated with various jobs. Current production records show the following information for three recent jobs Assume overhead application rates of $14 per machine hour for the Machining Department and 200% of direct labor costs for the Fabrication Department.
1. Overhead cost for Job A in Machining Department = 10 machine hours * $14 per machine hour. 2. Overhead cost for Job B in Fabrication Department = $500 direct labor costs * 200%.
To determine the costs associated with various jobs using the given information, we need additional details about the direct labor costs and machine hours for each job. Without that information, we cannot calculate the specific costs for the jobs.
1. Machining Department:
The overhead application rate is $14 per machine hour. To allocate overhead costs to a job in the Machining Department, you would multiply the number of machine hours used by the overhead application rate. Let's assume Job A required 10 machine hours in the Machining Department. The overhead cost allocated to Job A would be: Overhead cost for Job A in Machining Department = 10 machine hours * $14 per machine hour.
2. Fabrication Department:
The overhead application rate is 200% of direct labor costs. To allocate overhead costs to a job in the Fabrication Department, you would multiply the direct labor costs for the job by the overhead application rate. Let's assume Job B had direct labor costs of $500 in the Fabrication Department. The overhead cost allocated to Job B would be: Overhead cost for Job B in Fabrication Department = $500 direct labor costs * 200%.
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Month-end payments of $1,410 are made to settle a loan of $136,880 in 9 years. What is the effective interest rate? % Round to two decimal places
The effective interest rate is 4.50%.
Given data: Principal amount (P) = $136,880 Payment amount (A) = $1,410Number of years (n) = 9We can use the PMT function in Excel to solve for the effective interest rate. The formula is as follows: = RATE(n, A, -P, 0) * 12Multiplying the result by 12 converts the effective annual rate to a monthly rate. The effective interest rate is 4.50%.
The effective interest rate is used to compare interest rates on loans with different compounding periods, such as monthly or yearly, and provides an annualized interest rate. It represents the true cost of borrowing over the life of the loan, including all fees and charges.
To calculate the effective interest rate, the annual percentage rate (APR) is adjusted for the number of compounding periods per year. This formula takes into account the principal amount, payment amount, and number of years. Using the PMT function in Excel, we can solve for the effective interest rate, which in this case is 4.50% for a loan of $136,880 with monthly payments of $1,410 over 9 years.
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Question 1
Financial manager has the following duty in the organization, except:
OA. Oversees cash management
OB. Credit management
OC. Cash processing
COD. Financial planning
The financial manager in an organization has various duties, and one of them is not cash processing (OC).
Oversees cash management: One of the key responsibilities of a financial manager is to oversee cash management, which involves monitoring and controlling the organization's cash flow, ensuring sufficient liquidity, and optimizing the utilization of available funds.
Credit management: Financial managers are responsible for managing the organization's credit policies and practices. This includes assessing creditworthiness of customers, establishing credit terms, and managing accounts receivable.
Cash processing: While cash processing is an important function within an organization, it is typically handled by cashiers or other operational staff rather than the financial manager. Cash processing involves tasks such as counting, reconciling, and depositing cash transactions.
Financial planning: Financial managers play a crucial role in financial planning for the organization. They develop financial forecasts, create budgets, and make strategic decisions to ensure the financial well-being and growth of the organization.
Therefore, the financial manager's duties typically include overseeing cash management, credit management, and financial planning, but not cash processing, which is usually performed by operational staff.
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Job Analysis
Do you have a job description of your current or previous job? Do you know who developed it, and how was it developed?
a customer service rep the job descriptionJob Design: The statements below signify either a top-down or bottom up job design scenario. Select the two top-down scenarios and leave the two bottom up scenarios blank. The click the check mark button to submit. Your boss thinks the processes in your department could be improved. She asks you and other employees in your department to come up with some ideas for streamlining them. Your boss is so pleased with your work that she asks you to train other employees. Your boss decides to install hands-free phone systems in all company vehicles. Your boss thinks your workload might be too heavy. She asks you to keep track of the time you spend daily on each of your activities.
Job descriptions are typically developed by human resource professionals or hiring managers in collaboration with relevant stakeholders.
They are created to outline the responsibilities, requirements, and expectations of a specific job role within an organization. Job descriptions are typically based on an analysis of the tasks, skills, and qualifications needed for the job.
In the given scenarios, the top-down job design scenarios would be:
Your boss decides to install hands-free phone systems in all company vehicles.
Your boss thinks your workload might be too heavy. She asks you to keep track of the time you spend daily on each of your activities.
In these scenarios, the decision and direction come from the boss or higher-level management, and employees are expected to follow the instructions or guidelines provided. Bottom-up scenarios, which are not provided in the options, would involve employees contributing ideas and suggestions to improve processes or taking initiatives to streamline tasks based on their own observations and expertise.
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Assume the portfolio returns for a large population of large cap equity funds has a standard deviation of 9.8%, and returns are independent across funds. If you are collecting a random sample of fund returns and want the standard deviation of sample mean distribution to be at most 1.3 %, what is the size of the sample you must collect?
Enter answer as the smallest integer sample that will accomplish your objective.
The smallest integer sample size that will accomplish the objective is 115.
To determine the sample size needed to achieve a desired standard deviation of the sample mean, we can use the formula:
n = (Z * σ / E)^2
where:
n is the sample size
Z is the Z-score corresponding to the desired level of confidence (typically chosen based on the confidence interval)
σ is the population standard deviation
E is the desired maximum error (standard deviation of the sample mean)
In this case, we want the standard deviation of the sample mean to be at most 1.3%. This corresponds to an error (E) of 0.013.
Assuming a large population of large cap equity funds with a standard deviation of 9.8%, we have σ = 0.098.
Let's assume a 95% confidence level, which corresponds to a Z-score of approximately 1.96.
Plugging these values into the formula, we get:
n = (1.96 * 0.098 / 0.013)^2
n ≈ 10.712^2
n ≈ 114.74
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In State v. Stark (1992), the Washington State Supreme Court affirmed Calvin Clark’s conviction because he purposely exposed his sexual partners to HIV.
1.Identify all of the facts relevant to determining Stark’s mental attitude regarding each of the elements in the assault statute.
Stark's mental attitude and whether he acted purposely or knowingly in exposing his sexual partners to HIV.
In order to determine Stark's mental attitude regarding each of the elements in the assault statute, the relevant facts would include:
1. Evidence of Stark's knowledge and awareness of his HIV-positive status.
2. Any actions or statements by Stark indicating his intent or purpose to engage in sexual activity with his partners.
3. Any evidence of Stark's understanding of the potential risks and consequences of his actions in terms of transmitting HIV.
4. Testimony or statements from Stark's sexual partners regarding their knowledge of his HIV status and whether he disclosed this information to them.
5. Any evidence of Stark's disregard for the well-being and safety of his sexual partners, such as engaging in unprotected sex despite knowing the risks involved.
These facts would help determine Stark's mental attitude and whether he acted purposely or knowingly in exposing his sexual partners to HIV.
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Question two a. Mulolenji consumes goods x₁ and x2 such that u(x₁, x₂) = x² + 2x₂x₁ + x². i. Derive the optimal bundle for x if the prices of x₁ and x₂ are p₁ and P2 respectively, while the individual's income is m: Geometrically illustrate the optimal solution if p, = K2, P2 = K1, and m = K100 771 10p₁ b. Suppose that the consumer has a demand function for milk of the form x₁ = 10 +1 Originally his income is K120 per week and the price of milk is K3 per quart. Calculate the income and substitution effect if the price falls to K2
a. The optimal bundle for goods x₁ and x₂ can be derived by solving the consumer's utility maximization problem, considering the prices (p₁, p₂) and the income (m).
Geometric illustration with p₁ = K2, p₂ = K1, and m = K100 771 10p₁ shows the optimal solution.
To derive the optimal bundle, we need to maximize the consumer's utility function, subject to the budget constraint. In this case, the utility function is u(x₁, x₂) = x₁² + 2x₂x₁ + x₂². The budget constraint is given by p₁x₁ + p₂x₂ = m.
By solving the utility maximization problem using Lagrange multipliers, we can find the optimal bundle of goods x₁ and x₂. Geometrically illustrating the solution with specific prices and income helps visualize the consumer's optimal choice in the given scenario.
b. Given the demand function x₁ = 10 + 1 and the initial income of K120 per week and a price of milk at K3 per quart, we can calculate the income and substitution effects when the price falls to K2.
The income effect measures the change in the quantity demanded of milk due to the change in real income, while the substitution effect measures the change in quantity demanded due to the relative price change, holding real income constant.
To calculate the income effect, we compare the initial demand for milk with the new demand at the lower price, assuming the consumer's income remains unchanged. The difference in quantity demanded gives us the income effect.
To calculate the substitution effect, we compare the initial demand for milk with the new demand at the lower price, assuming the consumer adjusts their consumption to maintain the same level of utility. The difference in quantity demanded gives us the substitution effect.
By analyzing the changes in quantity demanded and considering the price change, we can determine the income and substitution effects when the price of milk falls to K2.
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Pluto Intelligence has a beta of 0.4 Neptune Media has a beta equal to 15 The required return on the stock market is 9 6% and the risk-free rate is 3.0% What is the difference (in percent) between Pluto's and Neptunes's required rates of return Neptune Pluto)?
The difference in the required rates of return between Pluto Intelligence and Neptune Media is -1.65%. Neptune Media has a higher required rate of return than Pluto Intelligence.
The difference in the required rates of return between Pluto Intelligence and Neptune Media can be calculated using the formula:
The difference in the required rate of return = Neptune's required rate of return - Pluto's required rate of return
To calculate each company's required rate of return, we need to use the Capital Asset Pricing Model (CAPM) formula:
Required Rate of Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate)
Given:
- Beta of Pluto Intelligence (Pluto) = 0.4
- Beta of Neptune Media (Neptune) = 15
- Risk-Free Rate = 3.0%
- Market Return = 9.6%
Now, let's calculate the required rates of return for both companies:
Pluto's required rate of return = 3.0% + 0.4 * (9.6% - 3.0%) = 3.0% + 0.4 * 6.6% = 3.0% + 2.64% = 5.64%
Neptune's required rate of return = 3.0% + 15 * (9.6% - 3.0%) = 3.0% + 15 * 6.6% = 3.0% + 0.99% = 3.99%
Now, let's calculate the difference in their required rates of return:
Difference in required rate of return = 3.99% - 5.64% = -1.65%
In summary, the difference in the required rates of return between Pluto Intelligence and Neptune Media is -1.65%. Neptune Media has a higher required rate of return than Pluto Intelligence.
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You purchased 24.00 shares of Bank of America one year ago for $8.59 per share. Today, one share trades for $9.32 and paid a dividend of $1.12 per share. Based on your number of shares purchased, what is the total dollar return of your investment?
The total dollar return of your investment in Bank of America is $34.40.
To calculate the total dollar return, we need to consider the change in share price and the dividend received.
First, let's calculate the change in share price. The current share price is $9.32 and the purchase price was $8.59. So, the change in share price is $9.32 - $8.59 = $0.73 per share.
Next, let's calculate the dividend received. The dividend per share is $1.12.
Now, multiply the change in share price by the number of shares purchased to find the change in value: $0.73 x 24.00 = $17.52.
Finally, add the dividend received to the change in value to get the total dollar return: $17.52 + $1.12 = $18.64.
Therefore, the total dollar return of your investment is $18.64.
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a. What is the company's total debt? b. What is the amount of total liabilities and equity that appears on the firm's balance sheet? $ c. What is the balance of current assets on the firm's balance sheet? $ d. What is the balance of current liabilities on the firm's balance sheet? $ e. What is the amount of accounts payable and accruals on its balance sheet? (Hint: Consider this as a single line item on the firm's balance sheet.) $ f. What is the firm's net working capital? If your answer is zero, enter "0". $ g. What is the firm's net operating working capital? $ h. What is the monetary difference between your answers to part f and g ? $ What does this difference indicate?
a. To find the company's total debt, we add long-term debt and current liabilities together .Total debt = Long-term debt + Current liabilities = $325 million + $207 million
= $532 million.
b. To determine the amount of total liabilities and equity that appears on the firm's balance sheet, we add the firm's total liabilities and total equity .Total liabilities and equity = Total liabilities + Shareholders' equity
= $425 million + $115 million
= $540 million
c. The balance of current assets on the firm's balance sheet is $280 million.
d. The balance of current liabilities on the firm's balance sheet is $207 million.
e. The amount of accounts payable and accruals on its balance sheet is $177 million.
f. Net working capital is calculated by subtracting current liabilities from current assets. Therefore, the company's net working capital is: Net working capital = Current assets − Current liabilities
= $280 million − $207 million
= $73 million.
g. Net operating working capital is the difference between operating current assets and operating current liabilities. Net operating working capital = Operating current assets − Operating current liabilities
= $240 million − $170 million
= $70 million.
h. The monetary difference between the answers to parts f and g is $3 million. This indicates that the company has a small amount of excess cash or short-term marketable securities.
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Due: Thursday, July 28, 2022 at B:30 am " thecks on Saturday, fuly 30,2022 at 8:30 am Severe weather con have a significant short-term effect on a restaurant's sales levels fissume you own a restauront chain where business is bikely to be offected by seiere winter weather. How would this impsct the development of your budget?
Severe winter weather can have a significant short-term effect on a restaurant's sales levels, and this can impact the development of a restaurant's budget.
The budget for a restaurant chain that is likely to be affected by severe winter weather would need to take into account the potential for decreased sales during this time. This might mean allocating more money to marketing efforts to encourage customers to visit the restaurant despite the weather, or reducing expenses in other areas to make up for the decrease in revenue.
Additionally, the budget might need to account for increased costs associated with keeping the restaurant open during inclement weather, such as higher heating bills or additional staffing needs. Overall, it is important for a restaurant chain to consider the potential impact of severe winter weather on their sales levels when developing their budget, and to make adjustments as needed to ensure that the restaurant remains profitable even during difficult weather conditions.
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Discuss the alternatives to using a RDBMS and provide current
examples of where/who uses those alternatives. (450 to 500 words
approximately), be SPECIFIC
Alternatives to using a relational database management system (RDBMS) include NoSQL databases, NewSQL databases, and graph databases.
These alternatives are being used by various organizations and industries for specific purposes. Examples of companies using these alternatives include Airbnb, Netflix, Uber, and LinkedIn.
While relational database management systems (RDBMS) have been the traditional choice for data storage and management, alternative database technologies have emerged to address specific use cases and requirements. One popular alternative is NoSQL databases, which are designed to handle large volumes of unstructured or semi-structured data and offer high scalability and performance.
Companies like Airbnb utilize NoSQL databases like Apache Cassandra to handle massive amounts of data, providing seamless experiences for millions of users across the globe. Netflix is another example, leveraging NoSQL databases like Apache Couchbase for their recommendation engine and content management system, allowing them to personalize user experiences and efficiently manage their vast content library.
Another alternative to RDBMS is NewSQL databases, which aim to combine the benefits of traditional relational databases with the scalability and flexibility of NoSQL databases. CockroachDB is a notable example, used by companies such as Uber for global data replication and high availability. Uber's platform relies on CockroachDB to ensure consistent and reliable data storage across multiple data centers, enabling real-time ride-hailing and tracking services worldwide.
Graph databases are yet another alternative that excels in managing highly interconnected data. LinkedIn, the professional networking platform, utilizes the power of graph databases like Neo4j to analyze complex relationships between professionals, providing valuable insights and personalized recommendations for its users. The graph database allows LinkedIn to efficiently traverse connections and make data-driven recommendations for job opportunities, networking, and content.
In addition to these alternatives, there are other niche database technologies suited for specific use cases. For instance, time-series databases like InfluxDB are optimized for handling massive amounts of time-stamped data, making them ideal for applications in IoT, financial markets, and monitoring systems. Companies such as Bloomberg and Tesla leverage time-series databases to store and analyze real-time data streams, enabling them to make informed decisions and respond quickly to changing conditions.
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Q5. (5pts) If the real return on government bonds is 3 percents and the expected rate of inflation is 4 percents, then the cost of holding money is percent. (a) 1 (b) 3 (c) 4 (d) 7
If the real return on government bonds is 3 percent and the expected rate of inflation is 4 percent, then the cost of holding money is 3 percent. So the answer is option b
The cost of holding money can be calculated as the difference between the nominal interest rate and the expected inflation rate. In this case, the real return on government bonds is given as 3% and the expected rate of inflation is 4%.
The nominal interest rate is the sum of the real return and the inflation rate. So, in this case, the nominal interest rate would be 3% + 4% = 7%.
The cost of holding money is determined by the opportunity cost of holding cash instead of investing it in bonds or other interest-bearing assets. When the nominal interest rate exceeds the expected inflation rate, the cost of holding money is positive.
Therefore, the cost of holding money in this scenario is 7% - 4% = 3%.
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Chicago's Hard Rock Hotel distributes a mean of 1,100 bath towels per day to guests at the pool and in their rooms. This demand is normally distributed with a standard deviation of 100 towels per day, based on occupancy. The laundry firm that has the linen contract requires a 4-day lead time. The hotel expects a 99% service level to satisfy high guest expectations. Refer to the for z-values. a) What is the reorder point? towels (round your response to the nearest whole number).
The reorder point is the inventory level at which a new order should be placed to replenish stock and meet customer demand. In this scenario, we need to calculate the reorder point for bath towels at the Hard Rock Hotel in Chicago, given the mean demand, standard deviation, lead time, and desired service level.
To calculate the reorder point, we need to consider the lead time demand, which is the average demand during the lead time. In this case, the lead time is 4 days. The mean demand per day is given as 1,100 towels with a standard deviation of 100 towels.
First, we calculate the lead time demand by multiplying the mean demand per day by the lead time:
Lead time demand = Mean demand per day * Lead time
Lead time demand = 1,100 towels/day * 4 days = 4,400 towels
Next, we calculate the safety stock, which is the buffer inventory needed to account for demand variability during the lead time. Since the desired service level is 99%, we need to find the corresponding z-value from the standard normal distribution table. For a 99% service level, the z-value is approximately 2.33.
Safety stock = Z-value * Standard deviation * Square root of lead time
Safety stock = 2.33 * 100 towels * √4 = 2.33 * 100 * 2 = 466 towels
Finally, we calculate the reorder point by adding the lead time demand and safety stock:
Reorder point = Lead time demand + Safety stock
Reorder point = 4,400 towels + 466 towels = 4,866 towels
Therefore, the reorder point for bath towels at the Hard Rock Hotel in Chicago is approximately 4,866 towels.
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How far thwey it the hseizen eate? 1. The termieal, or harizon, date is the date when the growth rate becomes cocteant. Fhis sccurs at the end of Yetr 2. 11. The termital, of hoeieon, cate is infisty since commen stocks to not tave a maturity dote. TW. The teminat, oe honeph, cate is the date wher the prowth tate becoites concorstavt. This cccura at trie zero. 1. The terminal, er honteot, date is the date when the growth rate becames contast. This occurs ot the begincing of vear 2 . 3
The terminal date or horizon date is the date when the growth rate becomes constant. The terminal date for Year 2 is the end of Year 2. For common stocks, the terminal date is infinite. At time zero, the growth rate becomes constant.
Based on the information provided, about the "terminal date" or "horizon date" in relation to growth rates is given below:
1. The terminal date, or horizon date, is the date when the growth rate becomes constant. This occurs at the end of Year 2.
2. The terminal date, or horizon date, is infinite since common stocks do not have a maturity date.
3. The terminal date, or horizon date, is the date when the growth rate becomes constant. This occurs at time zero.
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Bayani Bakery's most recent FC was $48
million; the FCF is expected it grove at a
sonstant rate of 6%, The Arm's WACC is
12%, and it has 15 milion shares, of coramon
stock outstanding. The firm has 330 milion
in shor- term investrents, which it plans to
liquidate and distribute to common
shareholders via a stock repurchase; the firm
has no
other nonoperating assets. It has $368
million in debt and $60 million in preferred
stock
a. What is the value of operations?
b. Immediately prior to the repurchase, what
is the intrinsic value of equity?
c. Immediately prior to the repurchase, what
is the intrinsic stock price?
d. How many shares will be repurchased?
The value of the operations of Bayani Bakery is $850 million. The intrinsic value of equity before the stock repurchase is $39.5 per share. The intrinsic stock price before the stock repurchase is $39.5 per share. Therefore, the number of shares to be repurchased is 7.59 million (approx.).
a) Value of operations of Bayani BakeryThe value of operations of Bayani Bakery can be calculated using the following formula: Value of operations (Vop) = FCF1 / (WACC - g)Where FCF1 = Free cash flow after 1 year, WACC = Weighted average cost of capital, g= Constant rate of growth. FCF1 can be calculated as follows: FCF1 = FCFF × (1 + g) = $48 million × (1 + 6%) = $51 million. Now, using the above formula: Vop = $51 million / (12% - 6%) = $850 million. Thus, the value of the operations of Bayani Bakery is $850 million.
b) Intrinsic value of equity before the stock repurchase can be calculated as follows: Intrinsic value of equity (V0) = Vop + Short-term investments - Debt - Preferred stock / Number of common shares outstanding Where, Short-term investments = $330 million Debt = $368 million Preferred stock = $60 million Number of common shares outstanding = 15 million Now, substituting the values in the formula: V0 = $850 million + $330 million - $368 million - $60 million / 15 million= $39.5 per share. Thus, the intrinsic value of equity before the stock repurchase is $39.5 per share.
c) Intrinsic stock price before the stock repurchaseThe intrinsic stock price before the stock repurchase is the same as the intrinsic value of equity before the stock repurchase. Therefore, the intrinsic stock price before the stock repurchase is $39.5 per share.
d) Number of shares to be repurchasedThe number of shares to be repurchased can be calculated using the following formula: Number of shares repurchased = (Market value of short-term investments - Total amount of repurchase) / Intrinsic value per shareWhere, Market value of short-term investments = $330 millionTotal amount of repurchase = $45 million (approx.)Intrinsic value per share = $39.5Now, substituting the values in the formula: Number of shares repurchased = ($330 million - $45 million) /$39.5= 7.59 million (approx.).
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Find partial elasticity of z wrt x and y
Find the partial elasticities of \( z \), w.r.t \( x \) and \( y \) for \( z=\ln (x+\sqrt{y}) \)
The elasticity of a variable is defined as the percentage change in the variable resulting from a 1% change in another variable.
How to find?The term partial elasticity refers to the elasticity of one variable while holding all other variables constant.
In this scenario,[tex]\( z=\ln (x+\sqrt{y}) \)[/tex].
Let's start by finding the partial derivative of \( z \) with respect to \( x \).
[tex]$$\frac{\partial z}{\partial x}=\frac{1}{x+\sqrt{y}}$$.[/tex]
Therefore, the partial elasticity of \( z \) with respect to \( x \) is;
[tex]\[\frac{\partial z}{\partial x} \cdot \frac{x}{z}=\frac{x}{x+\sqrt{y}} \cdot \frac{x+\sqrt{y}}{\ln (x+\sqrt{y})}[/tex]
[tex]=\frac{x}{x+\sqrt{y}} \cdot \frac{x+\sqrt{y}}{\ln x+\ln \sqrt{y}}[/tex]
[tex]=\frac{x}{x+\sqrt{y}} \cdot \frac{x+\sqrt{y}}{\ln x+\frac{1}{2} \ln y}\][/tex]
Now, let's take the partial derivative of \( z \) with respect to \( y \).
[tex]$$\frac{\partial z}{\partial y}=\frac{1}{2\sqrt{y}(x+\sqrt{y})}$$.[/tex]
Therefore, the partial elasticity of \( z \) with respect to \( y \) is;
[tex]\[\frac{\partial z}{\partial y} \cdot \frac{y}{z}[/tex]
[tex]=\frac{y}{2\sqrt{y}(x+\sqrt{y})} \cdot \frac{x+\sqrt{y}}{\ln (x+\sqrt{y})}[/tex]
[tex]=\frac{y}{2(x+\sqrt{y})\ln (x+\sqrt{y})}\][/tex]
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A manufacturing company places a semi-annual order of 24,000 units at a price of $20 per unit. Its carrying cost is 15% and the order cost is $12 per order.
Required:
1. What is the most economical order quantity?
2. How many orders need to be placed?
The most economical order quantity is 1,385 units and 18 orders need to be placed.
The most economical order quantity can be calculated using the Economic Order Quantity (EOQ) formula. The formula is:
EOQ = √((2DS)/H)
Where:
D = Annual demand
S = Ordering cost per order
H = Holding cost as a percentage of unit cost
In this case, the annual demand is 24,000 units, the ordering cost per order is $12 and the holding cost is 15% of the unit cost. The unit cost is $20.
Substituting these values into the formula gives:
EOQ = √((2 x 24,000 x 12)/0.15 x 20) = 1,385 units
Therefore, the most economical order quantity is 1,385 units.
The number of orders that need to be placed can be calculated by dividing the annual demand by the EOQ:
Number of orders = Annual demand / EOQ = 24,000 / 1,385 = 17.33
Since you cannot place a fraction of an order, you would need to place 18 orders.
Therefore, the answer to your question is: 1. The most economical order quantity is **1,385 units,2. 18 orders need to be placed.
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Explain the HR Planning process (example - how to identify if
there is a surplus or shortage) (5 marks).
The process of Human Resource Planning (HRP) involves forecasting future personnel needs, determining the present manpower status, assessing manpower inventory, and planning and implementing necessary actions to meet future needs and correct imbalances.
HRP process for identifying surplus or shortage of workforce: When forecasting for personnel needs, an organization must assess its current workforce status. This includes reviewing current employee demographics, retirement and departure projections, current job positions, and the employee skills inventory to identify possible skill gaps and/or shortages. The organization must then take into account the possible factors that may affect the supply of qualified applicants, such as market competition, job seekers’ demographics, and changes in labour legislation, to name a few. Thus, the HR department needs to determine if there is a surplus or a shortage of employees in the organization. In the case of surplus employees, there may be too many workers for the required work.
A shortage, on the other hand, is when there are not enough workers to meet the demand for work. The HR department needs to identify the reasons for such a situation and then take necessary actions to correct it if necessary. It can do this by transferring employees to other departments, reducing work hours, or eliminating redundant jobs from the system. It can also implement recruitment and selection processes to fill the job gaps in the organization.Therefore, the HR Planning process involves reviewing the current workforce status, forecasting future personnel needs, and assessing the workforce inventory, among other steps, to identify if there is a surplus or shortage of employees in the organization.
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Tidys Consultants Inc. Had the following selected transactions in May 2020: (Click the icon to view the transactions. ) Requirements 1. Show how each transaction would be handled using the cash basis and the accrual basis. Assume depreciation expense of $30 for software and $30 for the computer. 2. Compute May income (loss) before tax under each accounting method. 3. Indicate which measure of net income or net loss is preferable. Use the transactions on May 11 and May 24 to explain transactions that do not affect revenues or expenses. Use parentheses or a minus sign when entering expenses or losses. ) Tidys Consultants Inc. Amount of Revenue (Expense) for May 2020 Date Cash Basis Accrual Basis May 1 1000 1000 May 4 May 5 1200 0 0 Transactions May 1 May 4 May 5 May 8 May 11 May 19 May 24 May 26 May 29 May 31 May 31 Prepaid insurance for May through September, $1,000 Purchased software for cash, $1,000 Performed service and received cash, $1,200 Paid advertising expense, $400 Performed service on account, $3,100 Purchased computer on account, $1,700 Collected for the May 11 service Paid account payable from May 19 Paid salary expense, $1,500 Adjusted for May insurance expense (see May 1) Earned revenue of $600 that was collected in advance in April May 11 May 19 May 24 May 26 May 29 May 31 May 31 he 3100
1. Transactions using the cash basis and accrual basis:
- May 1: Prepaid insurance for May through September, $1,000
- Cash Basis: No effect on the income statement.
- Accrual Basis: Increase insurance expense by $200 ($1,000/5 months) on the income statement.
- May 4: Purchased software for cash, $1,000
- Cash Basis: No effect on the income statement.
- Accrual Basis: Increase software expense by $30 on the income statement.
- May 5: Performed service and received cash, $1,200
- Cash Basis: Increase revenue by $1,200 on the income statement.
- Accrual Basis: Increase accounts receivable by $1,200 and revenue by $1,200 on the income statement.
- May 8: Paid advertising expense, $400
- Cash Basis: Increase advertising expense by $400 on the income statement.
- Accrual Basis: Increase advertising expense by $400 on the income statement.
- May 11: Performed service on account, $3,100
- Cash Basis: No effect on the income statement.
- Accrual Basis: Increase accounts receivable by $3,100 on the balance sheet and increase revenue by $3,100 on the income statement.
- May 19: Purchased computer on account, $1,700
- Cash Basis: No effect on the income statement.
- Accrual Basis: Increase computer expense by $30 on the income statement.
- May 24: Collected for the May 11 service
- Cash Basis: Increase cash by $3,100 on the balance sheet.
- Accrual Basis: No effect on the income statement.
- May 26: Paid account payable from May 19
- Cash Basis: Decrease cash by $1,700 on the balance sheet.
- Accrual Basis: No effect on the income statement.
- May 29: Paid salary expense, $1,500
- Cash Basis: Decrease cash by $1,500 on the balance sheet.
- Accrual Basis: Increase salary expense by $1,500 on the income statement.
- May 31: Adjusted for May insurance expense (see May 1)
- Cash Basis: No effect on the income statement.
- Accrual Basis: Increase insurance expense by $200 on the income statement.
- May 31: Earned revenue of $600 that was collected in advance in April
- Cash Basis: No effect on the income statement.
- Accrual Basis: Increase revenue by $600 on the income statement.
2. May income (loss) before tax under each accounting method:
- Cash Basis: $2,300 ($1,200 - $400 + $3,100 - $1,700 - $1,500)
- Accrual Basis: $2,700 ($1,200 - $200 - $400 + $3,100 - $30 - $1,500 + $600)
3. The preferable measure of net income or net loss would depend on the specific circumstances and the purpose for which the financial statements are being prepared.
The cash basis provides a straightforward view of cash flows and can be useful for small businesses or individuals who primarily focus on cash management. It recognizes revenue when cash is received and expenses when cash is paid out. However, it may not accurately reflect the financial performance or the timing of transactions.
The accrual basis, on the other hand, matches revenues with expenses in the period they are incurred, providing a more comprehensive view of the company's financial performance
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Explain the Contingency Business Environment Tools,
Process, and Policy
Contingency planning is an integral part of every business. The primary objective of contingency planning is to ensure that the company can continue to function and thrive despite the occurrence of unexpected events or circumstances that may threaten its stability.
In order to develop a robust contingency plan, businesses require tools, processes, and policies that can help them anticipate, prepare, and respond to unexpected challenges. The following are some of the key tools, processes, and policies that can assist businesses in developing an effective contingency plan: Tools: Business Impact Analysis (BIA), Risk Assessment, Risk Management Process, Business Continuity Plan (BCP), and Disaster Recovery Plan (DRP) are some of the key tools that businesses can use to develop a robust contingency plan. Processes: The processes that businesses need to follow when developing a contingency plan typically involve identifying potential risks, analyzing their potential impact on the business, and developing a response strategy. Policies: Policies are the guidelines and rules that businesses need to follow when developing and implementing their contingency plan. These policies should outline the roles and responsibilities of key stakeholders, the procedures for responding to an incident, and the criteria for activating the contingency plan.
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You received a call from one of your company’s department managers asking you the name of the ""mexican"" software developer in your department. This is an example of?
The scenario you provided is an example of stereotyping or racial profiling.
Stereotyping refers to making assumptions or generalizations about a person or group based on their race, ethnicity, or nationality. In this case, the department manager assumes that there is a Mexican software developer in the department solely based on their nationality.
Stereotyping can be harmful and perpetuate biases and discrimination. It overlooks individuality and assumes that all people from a particular group have the same characteristics or abilities. It is important to recognize and challenge stereotypes in order to promote diversity, inclusion, and equal opportunities.
To address this situation, it is recommended to respond to the department manager by focusing on the individual's skills, qualifications, and contributions rather than their nationality. Provide the manager with the necessary information about the software developer without highlighting their nationality.
Additionally, it is crucial to foster an inclusive and diverse workplace where employees are valued for their skills and talents rather than their nationality or any other characteristic.
Promoting diversity and inclusion can lead to a more productive and harmonious work environment where everyone feels respected and valued for their unique contributions.
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Suppose the average worker in the U.S. is 8 times as productive as the average worker in Mexico. If the productivity of U.S. workers grows at 1% for 25 years and the productivity of Mexico’s workers grows at 5% for 25 years, which country will have higher productivity in 25 years?
Mexico
U.S.
Given that the average worker in the U.S. is currently 8 times as productive as the average worker in Mexico. If the productivity of U.S. workers grows at 1% annually for 25 years, the growth factor would be (1 + 0.01) ^ 25 = 1.2801.
Since 3.39 is still less than 8, the U.S. remains more productive. Similarly, if the productivity of Mexico's workers grows at 5% annually for 25 years, the growth factor would be (1 + 0.05) ^ 25 = 3.3868. After 25 years, the productivity ratio between the U.S. and Mexico would be 8 * 1.2801 = 10.2408. worker's productivity are not sufficient to surpass the U.S. productivity level in 25 years. The initial productivity gap and the slower growth rate of the U.S. Even with Mexico's higher productivity growth rate .
With the higher growth rate, Mexico's workers will experience a greater increase in productivity over 25 years. Thus, Mexico will have higher productivity than the U.S. in 25 years.
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Weekly demand for a product is 4,395 pounds with a standard deviation of 1,250 pounds. The lead time is 4.5 weeks, with a standard deviation of 3 weeks.
a.Suppose the store wishes to carry 5 weeks of demand as their safety inventory. What service level would they achieve? Report your answer to four decimal places.
b.Suppose the store wishes to have their service level at 99%. What is the level of safety inventory they should carry, and how many weeks of supply would that equal? Report safety inventory as an integer. Report weeks of supply to two decimal places.
a. The service level they would achieve is 0.3969.
b. The store should carry a safety inventory of approximately 6,337 pounds, which would provide them with 1.44 weeks of supply to achieve a service level of 99%.
a. To calculate the service level, we can use the formula: Service Level = 1 - (Safety Stock / Demand)
Given that the store wishes to carry 5 weeks of demand as their safety inventory, the safety stock can be calculated by multiplying the standard deviation of demand (1,250 pounds) by the square root of the lead time (4.5 weeks):
Safety Stock = Standard Deviation of Demand * Square Root of Lead Time
= 1,250 pounds * √(4.5 weeks)
= 1,250 pounds * 2.12132
= 2,651.65 pounds
Now, let's calculate the service level:
Service Level = 1 - (2,651.65 pounds / 4,395 pounds)
= 1 - 0.60314
= 0.3969 (rounded to four decimal places)
Thus, the store should achieve service level: 0.3969 (rounded to four decimal places)
b. To determine the level of safety inventory needed for a service level of 99%, we can use the inverse of the cumulative distribution function (CDF) of the standard normal distribution. The formula is: Safety Stock = Z * Standard Deviation of Demand * Square Root of Lead Time
where Z is the Z-score associated with the desired service level.
To find the Z-score, we can use a standard normal distribution table or a statistical calculator. For a service level of 99%, the Z-score is approximately 2.33.
Safety Stock = 2.33 * 1,250 pounds * √(4.5 weeks)
= 2.33 * 1,250 pounds * 2.12132
= 6,337.02 pounds (rounded to the nearest integer)
To calculate the weeks of supply, divide the safety stock by the average demand: Weeks of Supply = Safety Stock / Average Demand
= 6,337.02 pounds / 4,395 pounds
= 1.44 weeks (rounded to two decimal places)
Therefore, the store should carry a safety inventory of approximately 6,337 pounds, which would provide them with 1.44 weeks of supply to achieve a service level of 99%.
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(a) How much statistics does a business student need to know? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)
Not much-consultants do most of the statistical analysis.
Enough to handle everyday data problems.
Enough to feel confident discussing a colleague's data analysis.
Enough to know when to call in a statistical expert
(b-1) How can you tell when the point has been reached where you should call for an expertstatistician?
When you've reached the limit of your statistical expertise.
When your boss asks for a report of last week's sales data and you had planned to leave work early.
When you're looking for a promotion.
(b-2) List some benefits that would govern the decision to call an expert statistician. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)
Better sampling strategies, which can result in more useful data
Better understanding of what information can be extracted from the data.
a) Enough to handle everyday data problems. b-1) The moment at which you should seek the assistance of an expert statistician will vary based on the complexity of the data analysis and your level of statistical skill b-2) Better sampling strategies, which can result in more useful data.
How to determine how much statistics does a business student need to know(a) The answers to the question "How much statistics does a business student need to know?" are subjective and will vary depending on the job needs and responsibilities. Nonetheless, the following options are commonly accepted:
- Enough to handle everyday data problems.
- Enough to feel confident discussing a colleague's data analysis.
- Enough to know when to call in a statistical expert.
(b-1) The moment at which you should seek the assistance of an expert statistician will vary based on the complexity of the data analysis and your level of statistical skill. One indicator, though, could be when you've hit the limit of your statistical competence.
(b-2) The benefits that would govern the decision to call an expert statistician can include:
- Better sampling strategies, which can result in more useful data.
- Better understanding of what information can be extracted from the data.
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How we can evaluate the: 1- Cash. 2- Account Receivable. 3-Inventory. 4-Short-term Investment.
Cash: Evaluate the amount of cash on hand by reviewing the cash flow statement and balance sheet, and analyzing the cash conversion cycle. Accounts Receivable: Calculate the accounts receivable turnover ratio by dividing net credit sales by average accounts receivable.
Inventory: Analyze the inventory turnover ratio by dividing the cost of goods sold by average inventory. Short-term Investments: Review the investment portfolio and assess the ROI by calculating the return on investment and comparing it with benchmarks or target returns.
To evaluate the financial health of a company, we can analyze the following key components:
1. Cash: Cash evaluation involves assessing the amount of cash a company has on hand. This can be done by reviewing the company's cash flow statement and balance sheet. Additionally, evaluating the company's cash conversion cycle can provide insights into its efficiency in managing cash.
2. Accounts Receivable: To evaluate accounts receivable, we can calculate the accounts receivable turnover ratio. This ratio measures how efficiently a company collects its credit sales. A higher turnover ratio indicates better management of accounts receivable. We can calculate the ratio by dividing net credit sales by average accounts receivable.
3. Inventory: Evaluating inventory involves analyzing its turnover ratio. A higher ratio indicates that a company is efficiently managing its inventory. The turnover ratio can be calculated by dividing the cost of goods sold by average inventory.
4. Short-term Investments: To evaluate short-term investments, we can review the company's investment portfolio and assess the returns generated. This can be done by calculating the return on investment (ROI) and comparing it with industry benchmarks or the company's target return.
By analyzing these components, we can gain a better understanding of a company's liquidity, efficiency, and overall financial performance. It's important to note that the evaluation process may vary depending on the industry and specific circumstances.
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Why is In N Out so successful? Explain using demand and supply
why they are a success.
In-N-Out's success can be attributed to several factors, as seen through the lens of demand and supply.
On the demand side, In-N-Out has built a strong brand reputation and a loyal customer base by consistently delivering high-quality food, fresh ingredients, and a simple yet delicious menu.
Their commitment to providing a positive customer experience and friendly service has created a strong demand for their products. On the supply side, In-N-Out's success can be attributed to their efficient operations, streamlined processes, and a focus on maintaining control over the entire supply chain, including owning their own distribution centers and sourcing high-quality ingredients.
This ensures consistency in their offerings and allows them to maintain competitive pricing. Overall, In-N-Out's success can be attributed to their ability to meet customer demand through a combination of quality, simplicity, and operational efficiency.
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