7. Please list and discuss each of the major unconventional policy tools utilized by the FED. (10 points)

Answers

Answer 1

The Federal Reserve (Fed), as the central bank of the United States, has employed several unconventional policy tools in addition to its conventional monetary policy tools to address significant economic challenges.

Here are some of the major unconventional policy tools utilized by the Fed:

Quantitative Easing (QE): QE involves the purchase of long-term government securities and sometimes other assets, such as mortgage-backed securities, by the central bank. The aim is to increase the money supply, lower long-term interest rates, and stimulate lending and economic activity.

Forward Guidance: Forward guidance refers to the communication strategy employed by the central bank to provide explicit guidance on the future path of interest rates or other policy measures. This tool helps manage market expectations, influence borrowing costs, and shape economic behavior.

Zero Interest Rate Policy (ZIRP): ZIRP is a policy where the central bank sets the target interest rate at or near zero percent. This tool aims to encourage borrowing, investment, and spending by keeping borrowing costs low. ZIRP was employed during the global financial crisis and the subsequent economic downturn.

Negative Interest Rate Policy (NIRP): NIRP is an unconventional tool where the central bank sets the target interest rate below zero. It aims to stimulate borrowing and discourage saving by charging commercial banks for holding excess reserves. NIRP has been used by some central banks in countries facing prolonged economic stagnation or deflationary pressures.

Term Auction Facility (TAF): TAF is a program introduced during the financial crisis that allowed banks to borrow funds directly from the Fed through auctions. This tool provided liquidity support to financial institutions facing funding difficulties in the interbank lending market.

Operation Twist: Operation Twist involves the Fed buying long-term Treasury securities while simultaneously selling shorter-term Treasury securities. This action is aimed at lowering long-term interest rates relative to short-term rates, influencing borrowing costs, and stimulating economic activity.

Emergency Lending Programs: The Fed has established emergency lending programs, such as the Primary Dealer Credit Facility (PDCF) and the Term Asset-Backed Securities Loan Facility (TALF), to provide liquidity support to financial institutions during times of crisis. These programs help stabilize financial markets and promote lending.

Currency Swaps: The Fed can engage in currency swaps with foreign central banks, exchanging one currency for another, to address global liquidity strains and support international financial stability during times of crisis.

Bank Stress Tests: The Fed conducts stress tests on banks to assess their ability to withstand adverse economic scenarios. The results of these tests guide the Fed's decisions on capital requirements and ensure the soundness of the banking system.

Pandemic-related Measures: In response to the COVID-19 pandemic, the Fed implemented various programs, including the establishment of the Main Street Lending Program, Municipal Liquidity Facility, and Corporate Credit Facilities, to provide support to businesses, municipalities, and the corporate bond market.

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Zach and Ursiella were married for 18 years. Zach has been running the business and Ursilla has been staying home to watch their four kids. Zach gets involved in a relationship with Tina. Due to various differences, they have decided to go ahead with a divorce. Which of the following would not be a basis for Ursiella to claim spousal support? a) Length of time Zach and Ursiella have lived together. b) Functions performed by Zach and Ursiella. c) Existing Arrangement between Zach and Ursiella with regards to spousal support. d) Misconduct of Zach in relation to marriage with Ursiella.

Answers

Ursiella would not be able to claim spousal support based on the existing business arrangement between Zach and Ursiella. The correct answer is c.)

Spousal support, also known as alimony, is a financial arrangement in which one spouse provides financial assistance to the other following a divorce or separation. The factors considered when determining spousal support may vary depending on the jurisdiction, but they typically include the length of the marriage, the functions performed by each spouse during the marriage, and any misconduct or wrongdoing by either spouse.

In this scenario, the options provided are:

a) Length of time Zach and Ursiella have lived together: The length of the marriage is often considered when determining spousal support. However, this alone would not be the basis for Ursiella to claim spousal support.

b) Functions performed by Zach and Ursiella: The roles and functions performed by each spouse during the marriage can be taken into account when determining spousal support. This factor could potentially be a basis for Ursiella to claim spousal support.

c) Existing arrangement between Zach and Ursiella with regards to spousal support: If there is already an existing arrangement or agreement between Zach and Ursiella regarding spousal support, this could prevent Ursiella from making a claim for additional support.

d) Misconduct of Zach in relation to marriage with Ursiella: Misconduct or wrongdoing by one spouse can sometimes be a factor in determining spousal support. If Zach's misconduct can be proven and is relevant to the divorce, it could potentially be a basis for Ursiella to claim spousal support.

Out of the given options, the one that would not be a basis for Ursiella to claim spousal support is c) the existing arrangement between Zach and Ursiella regarding spousal support. If there is already an agreement in place that addresses spousal support, Ursiella would not be able to claim additional support beyond what has already been agreed upon.

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If investment decreases by $5 billion and the economy's MPC is 0.8, the aggregate demand curve will shift:

A) leftward by $25 billion at each price level

B) righward by $40 billion at each price level

C) righward by $5 billion

D) leftward by $40 billion

Answers

The correct answer is A) leftward by $25 billion at each price level.To determine the shift in the aggregate demand curve.

We need to calculate the total change in aggregate demand resulting from the decrease in investment. The formula to calculate the change in aggregate demand is:Change in Aggregate Demand = Change in Investment / (1 - MPC)In this case, the change in investment is -$5 billion, and the MPC (marginal propensity to consume) is given as 0.8. Let's plug in the values:Change in Aggregate Demand = -$5 billion / (1 - 0.8)Change in Aggregate Demand = -$5 billion / 0.2Change in Aggregate Demand = -$25 billion.

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Interest rates were at historical highs in the early 1980s. In August of 1981, you could earn 17.5% compounded annually on a five-year term deposit with a Canadian bank. Since then, the interest rate offered on five-year term deposits dropped to a low of 2.0% compounded annually in February of 2019. On a $10,500 deposit for a term of five years, how much more would you have earned at the historical high interest rate than at the more recent low rate? (Round your intermediate calculations and final answer to 2 decimal places.)

Difference

Answers

The difference in interest earned would be $16,429.63.

In order to find the amount of interest earned at the two different interest rates, we use the following formula for compound interest:

$A = P(1 + \frac{r}{n})^{nt} where, $A is the amount, P is the principal, r is the interest rate, n is the number of times the interest is compounded per year and t is the time period.

Using the given interest rates, we get:

Amount at the historical high interest rate = $10,500 (1 + \frac{17.5}{100})^{5}

= $27,454.73

Amount at the more recent low rate = $10,500 (1 + \frac{2.0}{100})^{5}

= $11,025.10

Difference in interest earned = $27,454.73 - $11,025.10

= $16,429.63

Therefore, the difference in interest earned would be $16,429.63.

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"Strategic leadership should emanate from multiple tiers in a company or a country, not just the top rung." Analyse the statement and article above and discuss the process of strategic planning as it would apply to Apple. apply to Apple.

In formulating his principles for leading Apple Inc., founder and CEO Steve Jobs had put innovation at the centre. One of his specific agendas was to create a "digital hub" for every private residence. Thus, the level of quality required for successful innovation is paramount.
2.1 In light of the statement and article above, discuss some of the quality related challenges Apple would have faced. I
2.2 Critically discuss the process of total quality management as it would apply to Apple.

Answers

The statement emphasizes the importance of strategic leadership at multiple tiers within a company or country, rather than solely relying on the top management.

2.1 Quality-related challenges faced by Apple:

a. Maintaining high product standards: Apple places a strong emphasis on quality and innovation. Ensuring that all products meet or exceed customer expectations poses a constant challenge. This includes rigorous testing, quality control processes, and strict adherence to design and manufacturing standards.

b. Balancing innovation and quality: Apple's commitment to innovation can create challenges in maintaining high-quality standards. Pushing the boundaries of technology and design introduces risks associated with product reliability, compatibility, and user experience. Striking the right balance between innovation and maintaining consistent quality can be demanding.

c. Supply chain management: Apple's global supply chain presents challenges in maintaining quality standards across different suppliers and manufacturing locations. Ensuring that components and materials meet the required specifications, and managing suppliers' quality control processes, are crucial to maintaining overall product quality.

2.2 The process of Total Quality Management (TQM) at Apple:

Total Quality Management is a comprehensive approach that focuses on achieving customer satisfaction by continuously improving all aspects of an organization. Applying TQM principles to Apple would involve the following:

a. Customer focus: Apple places a strong emphasis on understanding and meeting customer needs and expectations. TQM would involve collecting customer feedback, conducting market research, and using customer insights to drive product development and improvement efforts.

b. Continuous improvement: Apple would adopt a culture of continuous improvement by encouraging employees at all levels to identify opportunities for enhancing quality, efficiency, and innovation. This would involve setting quality goals, implementing processes for continuous monitoring and feedback, and promoting a culture of learning and innovation.

c. Employee involvement: TQM at Apple would involve empowering and involving employees at all levels in quality improvement initiatives. This includes providing training and resources for skill development, encouraging cross-functional collaboration, and recognizing and rewarding employee contributions to quality and innovation.

d. Process management: Apple would adopt effective process management systems to ensure consistency and efficiency in its operations. This includes identifying key processes, establishing metrics for performance evaluation, implementing process controls, and using data-driven approaches for decision-making and problem-solving.

The statement emphasizes the importance of strategic leadership at multiple tiers within an organization like Apple. Maintaining high product standards, balancing innovation and quality, and effectively managing the global supply chain are some of the quality-related challenges that Apple faces. Implementing Total Quality Management principles can help Apple address these challenges by focusing on customer satisfaction, continuous improvement, employee involvement, and effective process management. This approach would support Apple in maintaining its reputation for high-quality products and innovative solutions.

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Suppose you were looking at an economy where the consumption function is: C=50+0.75Y And you know that investors want to spend 500 at every level of income. In other words I=500. a. What is the equilibrium level of income? b. If the full - employment level of income is 2000 , is there a recessionary gap? If so, how large is the gap? c. What will happen to the equilibrium level of income if investors become pessimistic about the country's future and reduce their investment to 400 ? d. Is there an inflationary or recessionary gap now? How large?

Answers

a. To find the equilibrium level of income, we need to set aggregate expenditure (AE) equal to output (Y).

Aggregate expenditure (AE) is the sum of consumption (C) and investment (I):

AE = C + I

Given:

C = 50 + 0.75Y

I = 500

Substituting the values:

AE = (50 + 0.75Y) + 500

AE = 550 + 0.75Y

Equating AE with output (Y) to find the equilibrium:

Y = AE

Y = 550 + 0.75Y

Simplifying the equation:

0.25Y = 550

Solving for Y:

Y = 550 ÷0.25

Y = 2200

Therefore, the equilibrium level of income is 2200.

b. The recessionary gap can be determined by comparing the full-employment level of income (Yf) with the equilibrium level of income (Y).

Given:

Yf = 2000

To determine if there is a recessionary gap, we compare Yf with Y:

Recessionary Gap = Yf - Y

Recessionary Gap = 2000 - 2200

Recessionary Gap = -200

Yes, there is a recessionary gap of 200 in the economy.

c. If investors become pessimistic and reduce their investment to 400, we need to update the investment (I) value in the aggregate expenditure equation.

Given:

I = 400

The new aggregate expenditure equation becomes:

AE = (50 + 0.75Y) + 400

AE = 450 + 0.75Y

Equating AE with output (Y) to find the new equilibrium:

Y = AE

Y = 450 + 0.75Y

Simplifying the equation:

0.25Y = 450

Solving for Y:

Y = 450 ÷ 0.25

Y = 1800

Therefore, the equilibrium level of income would be 1800 if investors reduce their investment to 400.

d. To determine if there is an inflationary or recessionary gap with the new investment level, we compare the full-employment level of income (Yf) with the equilibrium level of income (Y).

Given:

Yf = 2000

Inflationary/Recessionary Gap = Y - Yf

Inflationary/Recessionary Gap = 1800 - 2000

Inflationary/Recessionary Gap = -200

With the new investment level of 400, there is still a recessionary gap of 200 in the economy.

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The partnership agreement of Mark and Cohen provides for salary allowances of $89500 to Mark and $70100 to Cohen, with the remaining income or loss to be divided equally. During the year, Mark and Cohen each withdraw cash equal to 85% of their salary allowances. If partnership net income is $197000, Mark's equity in the partnership would
a decrease more than Cohen's.
b increase the same as Cohen's.
c decrease the same as Cohen's.
d increase more than Cohen's.

Answers

The given partnership agreement states that salary allowances of $89500 are to be given to Mark and $70100 to Cohen. The remaining income or loss will be equally divided.

As per the question,

Salary allowance for Mark = $89500

Salary allowance for Cohen = $70100

The remaining income will be divided equally.

Now, Let us calculate the total salary allowance paid to both partners.

Adding Mark and Cohen's salary allowance, we get:

$89500 + $70100 = $159600

Now, let us calculate 85% of the salary allowance withdrawn by Mark and Cohen.

85% of $89500 = $76025 (amount withdrawn by Mark)

85% of $70100 = $59585 (amount withdrawn by Cohen)

Total amount withdrawn by both partners will be:

$76025 + $59585 = $135610Out of $197000 (total net income), the amount of salary allowance withdrawn by the partners is $135610.

The remaining amount will be:$197000 - $135610 = $61390

As per the given partnership agreement, the remaining income or loss will be divided equally. Thus, each partner's share of the remaining income will be:

$61390 ÷ 2 = $30695

Adding the amount withdrawn and each partner's share of the remaining income, we get:

Mark's equity = $76025 + $30695 = $106720

Cohen's equity = $59585 + $30695 = $90280

We can see that Mark's equity is higher than Cohen's, so it can be concluded that Mark's equity in the partnership would increase more than Cohen's.

Hence, option (d) is the correct.

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Most investments carry some type of risk for investors. If an issuer of a corporate bond is unabie to pay promised interest on the due date, this risk is referred to as: Select one: a. Liquidity risk b. Business risk c. Default risk d. Market risk

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The risk referred to when an issuer of a corporate bond is unable to pay promised interest on the due date is default risk. So, the correct option is c.

When investing in corporate bonds, investors face various types of risks. Default risk specifically refers to the risk that the issuer of a corporate bond will be unable to make the promised interest payments on the due date or fail to repay the principal amount at maturity. This means that the issuer may default on its obligations to bondholders, resulting in potential financial losses for investors.

Default risk is inherent in bonds because issuers can experience financial difficulties due to factors such as poor financial management, economic downturns, or changes in the issuer's industry or market conditions. It is important for investors to assess the creditworthiness of the issuer before investing in corporate bonds to evaluate the likelihood of default.

Other risks, such as liquidity risk (the risk of not being able to buy or sell an investment quickly at a fair price), business risk (the risk related to the specific business operations and performance of the issuer), and market risk (the risk of investment losses due to overall market fluctuations), are also relevant but not specifically related to the issuer's ability to make interest payments as default risk is.

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The market value of equity is $1000 and of debt is $600, the cost of debt is 3.9%, beta equity is 1.2, risk-free is 3%, market return is 9%, and the tax rate is 30%, calculate the after-tax WACC.
a.0%
b.7.39%
c.10.2%
d.7.6%

Answers

To calculate the after-tax Weighted Average Cost of Capital (WACC), we need to consider the weights of equity and debt in the capital structure, as well as the cost of equity and cost of debt adjusted for taxes.

Given:Market value of equity (E) = $1000Market value of debt (D) = $600Cost of debt (Rd) = 3.9%Beta of equity (β) = 1.2Risk-free rate (Rf) = 3%Market return (Rm) = 9%Tax rate = 30%First, we calculate the weight ofequity (We) and the weight of debt (Wd) in the capital structure:We = E / (E + D) = $1000 / ($1000 + $600) = 0.625Wd = D / (E + D) = $600 / ($1000 + $600) = 0.375Next, we calculate the after-tax cost of debt (Rd(1 - Tax Rate)):After-tax Rd = 3.9% * (1 - 0.30) = 2.73%Now, we can calculate the after-tax WACC:WACC = (We * Re) + (Wd * Rd(1 - Tax Rate)) = (0.625 * Cost of equity) + (0.375 * After-tax cost of debt)

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Roger owns 50% of the RPK general partnership. The remaining 50% is owned equally by Pete and Keith. The partnership made a § 754 election. Prior to any distributions, Roger’s outside basis is $550. On January 1 of this year, RPK distributes land with a value of $400 in complete liquidation of his interest in the partnership. At the time of the liquidating distribution the partnership’s balance sheet (after booking up) is as follows: Assets Liabilities & Capital Basis Book Liabilities Inventory $100 $240 Mortgage $900 Land 250 400 Building 750 1060 Total $1100 $1700 Capital Accounts Tax Book Roger $100 $400 Pete 50 200 Keith 50 200 Total $200 $800 Land distributed in complete liquidation of interest in partnership (a) What is the amount and character of any gain or loss recognized by each of the parties as a result of this transaction?(b) What is Roger’s basis in the land received in the transaction? Partners basis in land received (c) What is the partnership’s basis in the inventory and the building after the transaction?

Answers

(a) To determine the amount and character of gain or loss recognized by each party as a result of the transaction, we need to compare the fair market value (FMV) of the distributed land with each partner's outside basis. The gain or loss recognized will be the difference between the FMV and the outside basis.

Outside basis represents a partner's initial investment in the partnership, increased by their share of partnership income and decreased by their share of partnership losses and distributions.

Given the following information:

Roger's outside basis = $550

Pete and Keith's outside basis = $400 each

FMV of the distributed land = $400

For Roger:

Gain recognized = FMV - Outside basis

Gain recognized = $400 - $550

Gain recognized = -$150 (Loss)

For Pete and Keith:

Gain recognized = FMV - Outside basis

Gain recognized = $400 - $400

Gain recognized = $0

Therefore, Roger recognizes a loss of $150, while Pete and Keith do not recognize any gain or loss.

(b) Roger's basis in the land received in the transaction will be equal to his outside basis in the partnership.

Roger's basis in the land = $550

Therefore, Roger's basis in the land received is $550.

(c) The partnership's basis in the inventory and building after the transaction will be adjusted based on the basis adjustments resulting from the liquidating distribution.

Given the following adjustments:

Basis adjustment for land distributed = FMV of distributed land - Book basis of land distributed

Basis adjustment for land distributed = $400 - $250

Basis adjustment for land distributed = $150

Partnership's basis in the inventory after the transaction:

Adjusted basis = Book basis - Basis adjustment

Adjusted basis = $100 - $150

Adjusted basis = -$50

Partnership's basis in the building after the transaction:

Adjusted basis = Book basis - Basis adjustment

Adjusted basis = $750 - $150

Adjusted basis = $600

Therefore, the partnership's basis in the inventory after the transaction is -$50, and the partnership's basis in the building after the transaction is $600.

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a) There is a trend of service delivery moving from high-contact to low-contact. Are service personnel still important in low-contact services? Explain your answer.
b) What is emotional labour? Explain the ways in which it may cause stress for employees in specific jobs. Illustrate with suitable examples.
c) What are the factors that favour a strategy of employee empowerment? 3 marks d) As a human resources manager, which issues do you see as most likely to create boundary-spanning problems for customer contact employees in a customer call center at a major mobile telecoms provider? Select four issues and indicate how you would mediate between operations and marketing to create satisfactory outcome for all groups?

Answers

A) Yes, service personnel are still important in low-contact services because they play a crucial role in ensuring customer satisfaction, handling complex queries, and providing personalized assistance when needed.

B) Emotional labor refers to the effort and management of one's emotions as part of a job, often involving the expression or suppression of certain feelings to meet organizational expectations.

C) Factors that favor a strategy of employee empowerment include a culture of trust and collaboration, clear communication channels, and opportunities for skill development and decision-making.

D) Four issues that may create boundary-spanning problems for customer contact employees in a customer call center at a major mobile telecoms provider could be conflicting customer expectations, technical limitations, marketing promotions, and service disruptions.

In low-contact services such as online shopping or automated customer support systems, the role of service personnel may be reduced, but their importance remains. Customers may encounter issues that cannot be resolved through self-service options, and service personnel are required to address these concerns effectively. Additionally, service personnel can offer a human touch and empathy, which can enhance the overall customer experience. They may also assist customers in navigating complex processes or providing specialized knowledge. Therefore, while the level of direct contact may decrease, the presence of service personnel remains valuable in low-contact services.

Employees in customer service or hospitality industries are often required to display positive emotions, even if they may not genuinely feel that way. This can be stressful as they need to regulate their emotions constantly, leading to emotional exhaustion, burnout, and decreased job satisfaction. For example, a flight attendant must maintain a friendly and composed demeanor, even in challenging situations like dealing with disruptive passengers or flight delays, which can cause significant stress due to the need to manage emotions for extended periods.

Employee empowerment is facilitated when there is a culture of trust and openness, where employees feel valued and have the autonomy to make decisions. Clear communication channels ensure that employees are aware of organizational goals and can contribute effectively. Furthermore, providing opportunities for skill development and decision-making empowers employees by allowing them to take ownership of their work and contribute to the organization's success.

Conflicting customer expectations may arise when customers have different demands or preferences that are challenging to reconcile. Technical limitations may prevent customer contact employees from providing certain solutions or meeting specific requests. Marketing promotions can create discrepancies between what customers expect and what the call center can deliver. Service disruptions, such as network outages or system failures, may cause frustration among customers and create challenges for call center employees.

To mediate between operations and marketing, the HR manager could facilitate regular communication and collaboration between the two departments to align customer expectations, set realistic goals, provide adequate training and support to customer contact employees, and ensure that marketing initiatives consider operational feasibility and limitations.

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The balanced scoraced BSC is a contemporary performance measurement system that provides multi dimensional performance measures that are translated from an organisation's mission and strategies. Elaborate on the BSC's perspectives of performance measures and discuss how the implementation of BSC helps to manage and improve the organisation's performance.
- no handwriting
- 1000 words

Answers

The Balanced Scorecard (BSC) is a contemporary performance measurement system that offers multi-dimensional performance measures derived from an organization's mission and strategies.

The Balanced Scorecard (BSC) is a comprehensive framework that allows organizations to evaluate and monitor their performance from multiple perspectives. Traditionally, performance measures were primarily focused on financial metrics, such as revenue and profitability. However, the BSC recognizes that financial indicators alone are insufficient to gauge the overall health and success of an organization.

The BSC incorporates four distinct perspectives: financial, customer, internal processes, and learning and growth. Each perspective provides a unique lens through which performance can be assessed. The financial perspective examines traditional financial metrics to ensure the organization's long-term sustainability and profitability. The customer perspective focuses on customer satisfaction and loyalty, enabling organizations to deliver value to their target market. The internal processes perspective assesses the efficiency and effectiveness of the organization's internal operations. Finally, the learning and growth perspective considers the development of employee skills, knowledge, and capabilities, which are crucial for innovation and continuous improvement.

Implementing the BSC helps organizations manage and improve performance in several ways. By translating the organization's mission and strategies into measurable objectives and performance measures across multiple perspectives, the BSC provides a clear roadmap for achieving strategic goals. It enhances communication and alignment across different levels of the organization, ensuring that everyone understands and contributes to the overall objectives. Moreover, the BSC enables organizations to identify and address performance gaps, allocate resources effectively, and make informed decisions based on comprehensive and balanced information.

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Larkspur Inc. is building a new hockey arena at a cost of $2,450,000. It received a down payment of$490,000from local businesses to support the project, and now needs to borrow $1,960,000to complete the project. It, therefore, decides to issue$1,960,000 of 10 year, 10.5% bonds. These bonds were issued on January 1,2020 , and pay interest annually on each January 1 . The bonds yield 10%to the investor and have an effective interest rate to the issuer of 10.4053%. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Larkspur Inc. paid and capitalized$49,000in bond issuance costs related to the bond issue. Larkspur prepares financial statements in accordance with IFRS.

Answers

Larkspur Inc. is building a new hockey arena at a cost of $2,450,000. It will issue $1,960,000 of 10-year, 10.5% bonds, which have an effective interest rate to the issuer of 10.4053%. The bond issuance costs were $49,000 and have been capitalized.

The effective interest rate is the rate that takes into account the time value of money and the bond issuance costs. It is higher than the stated interest rate because the issuer has to pay the bond issuance costs upfront.

The capitalization of the bond issuance costs means that they are added to the carrying value of the bonds and amortized over the life of the bonds. This increases the effective interest rate.

The total borrowings of Larkspur Inc. are $1,960,000 + $49,000 = $2,009,000.

The effective interest expense for the first year will be $2,009,000 * 10.4053% = $208,946.

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Atlantic Fabrications has recently purchased Class 10 equipment for $200,000 with a CCA rate of 30%. Under the half-year rule, what is the amount of depreciation that the firm can claim as a tax-deductible expense in the second year?

Answers

The Atlantic Fabrications can claim $30,000 as a tax-deductible expense for depreciation in the second year. Option C is correct.

To calculate the amount of depreciation that Atlantic Fabrications can claim as a tax-deductible expense in the second year using the half-year rule, we need to apply the CCA rate of 30% to the cost of the equipment.

First, let's determine the CCA (Capital Cost Allowance) for the equipment. The CCA is calculated as a percentage of the cost of the asset.

CCA = Cost of the asset * CCA rate

CCA = $200,000 * 30% = $60,000

Now, applying the half-year rule, the firm can only claim half of the calculated CCA in the second year.

Depreciation claim in the second year = CCA * 0.5

Depreciation claim in the second year = $60,000 * 0.5 = $30,000

Hence, option C holds true.

The complete question:

Atlantic Fabrications has recently purchased Class 10 equipment for $200,000 with a CCA rate of 30%. Under the half-year rule, what is the amount of depreciation that the firm can claim as a tax-deductible expense in the second year?

A $25,500B $42,000C) $30,000D) $51,000

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For this week's discussion, create your own numerical example to illustrate Opportunity Cost with a Production Possibilities Curve (this would involve two products and numbers you come up with, holding Factors of Production constant...). Fully explain what the Possibilities Curve actually means for both these two specific products. For example:
- Discuss the model and the meaning of the slope of the curve, its shape, trade-offs, etc.
- Discuss efficiency and utilization of resources, etc.
- Upload a table and a graph for your Individual PPC and label points on the graph and explain what those points indicate.
You can use any two products but I always find when a model compares something like ping pong balls and steel beams - I think, wh sort of manufacturing operation is that? So l'd recommend two products that you believe could be legit tradeoffs for a farmer or manufacturer - so for example you could use skis and snowboards - those two are related and make sense. Or a farmer could grow wheat or corn? Anyway, I don't really care which two products you choose - I just add this comment for your information.
AND THEN
Discuss how this model can work across an entire economy - relate this to International Trade, Comparative Advantage and Specialization, as well as how does the model relate to Economic Growth and full utilization of the Factors of Production. Please be sure to fully explain the terms: Comparative Advantage, Specialization, Economic Growth and Factors of Production as part of your answer. You may want to add a second PPC model - perhaps computers and corn - a situation where one country/economy would want to trade for a product not efficiently produced in their own economy. And by the way. one can think about avocados in California and cranberries in Massachusetts... Or apples in Washington state and oranges in Florida...

Answers

The production possibilities curve (PPC) illustrates trade-offs, opportunity costs, and resource allocation between different products in an economy, facilitating understanding of comparative advantage, specialization, economic growth, and international trade.

The PPC represents the trade-offs and opportunity costs faced by the farmer. The slope of the curve represents the opportunity cost, which is the amount of one product that must be given up to produce an additional unit of the other product. The curve is typically concave, indicating increasing opportunity costs. This means that as the farmer allocates more resources to producing one product (e.g., corn), the opportunity cost of producing additional units of that product increases because resources are not perfectly adaptable between the two products.

Efficiency and utilization of resources are represented by points on the PPC. Points on the curve indicate that resources are fully utilized and allocated efficiently between corn and soybeans. Points inside the curve represent inefficient utilization of resources, while points outside the curve are currently unattainable given the available resources and technology.

Here is an example table and graph for an individual PPC for corn and soybeans:

Table:

| Production Combination | Corn (bushels) | Soybeans (bushels) |

|------------------------|----------------|--------------------|

| A                      | 0              | 100                    |

| B                      | 20             | 90                    |

| C                      | 40             | 70                    |

| D                      | 60             | 30                    |  

| E                      | 80             | 0                       |

Point A represents the situation where the farmer is producing only soybeans (100 bushels) and no corn. Point B represents the situation where the farmer allocates some resources to corn production (20 bushels) while reducing soybean production (90 bushels). As we move along the curve from point A to point B, the opportunity cost of producing corn increases.

The PPC can be applied to an entire economy, illustrating the concept of comparative advantage and specialization. Comparative advantage refers to the ability of a country or individual to produce a good or service at a lower opportunity cost compared to others. In our example, if the farmer has a lower opportunity cost in producing corn, it would be their comparative advantage. Specialization occurs when countries or individuals focus on producing goods or services in which they have a comparative advantage. By specializing in their respective areas of comparative advantage and trading with each other, countries can achieve higher overall production and economic efficiency.

International trade allows countries to access products that are not efficiently produced in their own economy. For example, if one country has a comparative advantage in producing computers, while another country has a comparative advantage in producing corn, they can trade with each other to benefit from the production and consumption of both products. This leads to increased economic growth and the full utilization of factors of production as resources are allocated to their most efficient uses.

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Suppose the rate of return on short-term govemment securities (perceived to be risk-free) is about 5%. Suppose also that the expected rate of return required by the market for a portfolio with a beta of 1 is 14%. According to the capital asset pricing model, suppose you consider buying a share of stock at $52. The stock is expected to pay $3.5 dividends next year and you expect it to sell then for $55. The stock risk has been evaluated at β=−5. Is the stock overpriced or underpriced? Insert - 1 for underpriced, 1 for overpriced, and 0 otherwise.

Answers

The stock is underpriced as its expected price is greater than its expected price according to the capital asset pricing model .Calculation of Expected return on the share using CAPM:CAPM formula is given as, Expected Return= Risk-free Rate + Beta(Expected Market Return - Risk-free Rate)

The risk-free rate is given as 5%.The expected return required by the market for a portfolio with a beta of 1 is 14%.The beta value of the stock is -5.Therefore,Expected Return= 5% + (-5)(14%-5%)= -45%The calculation shows that the expected return is a negative value, which means that the expected price of the stock is less than its current price. Thus, the stock is overpriced. However, the beta value is negative, which means that the expected return of the stock is negative. It also indicates that the stock's price is likely to go down in the future, making the expected price less than the current price. Therefore, the stock is underpriced if we consider its expected price. Hence, the answer is: 1 for underpriced.

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5. (3 points) Which of the following statements nbout risk averse javestors is true?
(a) They only sceept investments that offer risk premium over the risk-froe rate.
(b) They only care about the rute of return.
(c) They acoopt investments that nre fair gambles.
(d) Both a and b are true statements.
(e) Both b and c are true statements.
(f) B,b, and c are true statements.

6. (4 points) Which statenent about portfolio divenification is correct?
(a) Proper diversification can roduce or eliminate idionyncratie risk.
(b) Proper diversification can reduce or eliminate systemntic rikk.
(c) Proper diversification reduecs the portfolio's expected return bocanse it reduces \& portfolio's total risk.
(d) The risk-reducing benefits of diversification do not occur meaningfully until at least 30 individual sceurities are included in the portfolio.

Answers

Answer to question 5:The statement about risk-averse investors that is true is (a) They only accept investments that offer a risk premium over the risk-free rate. Risk-averse investors are those who are not interested in taking on risks; hence, they avoid all high-risk investments in their investment portfolios.

Answer to question 5:The statement about risk-averse investors that is true is (a) They only accept investments that offer a risk premium over the risk-free rate. Risk-averse investors are those who are not interested in taking on risks; hence, they avoid all high-risk investments in their investment portfolios. They focus on investments that have low volatility and consistent returns.A risk premium is an extra return that investors require as compensation for taking on higher risks. This is the difference between the expected rate of return on a risky asset and the risk-free rate of return. So, for risk-averse investors, they only accept investments that offer a risk premium over the risk-free rate. This extra return compensates them for taking on the additional risk. Answer to question 6:The correct statement about portfolio diversification is (a) Proper diversification can reduce or eliminate idiosyncratic risk.Idiosyncratic risk is risk that is specific to individual assets or companies, which can be eliminated through diversification. By investing in a variety of assets across various sectors, an investor can reduce the idiosyncratic risk of a portfolio. It is an unsystematic risk and can be avoided by including more investments in the portfolio. This is because it affects only specific investments and not the market as a whole. Therefore, proper diversification can reduce or eliminate idiosyncratic risk.

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In 2020 the budget for a machine shop showed overheads of P60,000 and volume of activity of 12,000 machine hours. In January of 2020, the machine shop incurred P5,400 of overhead and 1,050 machine hours were worked.

Required: a. Determine:

i. The predetermined absorption rate. (3 marks)

ii. The under/over absorption rate. (4 marks)

b. With the use of calculation, explain the factors that contributed to the under/over absorption of overheads. (6 marks)

Answers

a. i. The predetermined absorption rate can be calculated using the formula: Predetermined Absorption Rate = Budgeted Overheads / Budgeted Activity

ii. The under/over absorption rate can be calculated using the formula:

Under/Over Absorption Rate = Actual Overheads - (Predetermined Absorption Rate × Actual Activity)

i. The predetermined absorption rate can be calculated using the formula:

Predetermined Absorption Rate = Budgeted Overheads / Budgeted Activity

Given that the budgeted overheads for 2020 are P60,000 and the budgeted activity is 12,000 machine hours:

Predetermined Absorption Rate = P60,000 / 12,000

Predetermined Absorption Rate = P5 per machine hour

ii. The under/over absorption rate can be calculated using the formula:

Under/Over Absorption Rate = Actual Overheads - (Predetermined Absorption Rate × Actual Activity)

Given that the actual overheads incurred in January 2020 are P5,400 and the actual activity is 1,050 machine hours:

Under/Over Absorption Rate = P5,400 - (P5 × 1,050)

Under/Over Absorption Rate = P5,400 - P5,250

Under/Over Absorption Rate = P150 (over-absorbed)

b. Factors contributing to the under/over absorption of overheads:

The under/over absorption of overheads occurs when the actual overheads incurred differ from the overheads absorbed using the predetermined absorption rate. Several factors can contribute to this difference, including:

1. Variations in activity levels: If the actual machine hours worked are different from the budgeted activity, it can result in under or over absorption. In this case, the actual activity of 1,050 machine hours is less than the budgeted activity of 12,000 machine hours, leading to over-absorption of overheads.

2. Variations in overhead costs: If the actual overhead costs incurred are different from the budgeted overheads, it can also contribute to under or over absorption. In this case, the actual overheads incurred in January 2020 amount to P5,400, which is different from the budgeted overheads of P60,000.

3. Efficiency and productivity changes: If there are variations in the efficiency and productivity of the machine shop, it can affect the actual activity levels and, consequently, the absorption of overheads. Factors such as machine downtime, operator performance, or changes in production processes can influence the actual activity levels and contribute to under or over absorption.

4. Seasonal or temporary fluctuations: If the machine shop experiences seasonal or temporary fluctuations in activity levels, it can result in under or over absorption. For example, if January is typically a slower month for the machine shop, the actual activity might be lower than the budgeted activity, leading to over-absorption.

5. Changes in cost structure: If there are changes in the cost structure, such as changes in overhead rates, labor costs, or material costs, it can affect the absorption of overheads and result in under or over absorption.It is important for the machine shop to analyze the factors contributing to the under/over absorption of overheads to understand the reasons behind the difference and make necessary adjustments in future budgeting and cost control processes.

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Brief introduction of the company. Building strong customer relationships - Explain the reasons this company is able to build
strong customer relationship with the customers.

emphasize the importance for companies of building strong relationship with the customer . select a company and do a brief introduction. then talk about build strong customer relationship and explain the reasons this company is able to build
strong customer relationship with the customers. After that, analyse how the
company can capture the value from the customers and then to explain how the company generates continuous profit from the customers. also require to give some factor contributing to the strong customer relationship of the customer

Answers

Company Introduction:

XYZ Company is a leading global technology company that specializes in developing and manufacturing innovative electronic devices. With a strong presence in the market for over two decades, the company has established itself as a trusted provider of high-quality products and exceptional customer service. XYZ Company operates in various sectors, including consumer electronics, telecommunications, and healthcare, serving both individual consumers and business clients worldwide.

Building Strong Customer Relationships:

One of the key factors contributing to XYZ Company's ability to build strong customer relationships is its customer-centric approach. The company places great importance on understanding and fulfilling the needs and preferences of its customers. Here are the reasons why XYZ Company excels in building strong customer relationships:

Product Quality and Innovation: XYZ Company consistently delivers high-quality and innovative products that meet or exceed customer expectations. By offering cutting-edge technology, advanced features, and reliable performance, the company establishes trust and loyalty among its customers.

Exceptional Customer Service: XYZ Company prioritizes providing exceptional customer service throughout the customer journey. From pre-sales inquiries to after-sales support, the company ensures prompt and effective assistance, addressing any concerns or issues promptly. This personalized and responsive approach enhances customer satisfaction and fosters long-term relationships.

Customization and Personalization: Recognizing the diverse needs of its customers, XYZ Company offers customizable solutions and personalized experiences. By tailoring products and services to individual preferences, the company strengthens its connection with customers and demonstrates its commitment to meeting their unique requirements.

Communication and Engagement: XYZ Company actively engages with its customers through various channels, including social media, online communities, and customer feedback platforms. By listening to customer feedback, responding promptly, and maintaining open lines of communication, the company shows that it values customer input and continuously strives to improve its offerings.

Building Trust and Transparency: XYZ Company emphasizes transparency and ethical business practices. By providing accurate product information, transparent pricing, and fair policies, the company builds trust with its customers. Trust is a critical element in establishing and maintaining strong customer relationships.

Capturing Customer Value and Generating Continuous Profit:

To capture customer value, XYZ Company employs several strategies:

Upselling and Cross-selling: By understanding customer needs and preferences, XYZ Company identifies opportunities to upsell or cross-sell additional products or services. This allows the company to increase the value per customer and generate additional revenue.

Subscription and Service Models: XYZ Company offers subscription-based models or service plans that provide ongoing value to customers. These models ensure recurring revenue streams and create long-term relationships with customers.

Loyalty Programs: XYZ Company implements loyalty programs to reward and incentivize repeat purchases and customer loyalty. These programs encourage customers to stay engaged with the brand and increase their lifetime value.

Customer Referrals: Satisfied customers are encouraged to refer friends and family to XYZ Company's products and services. This word-of-mouth marketing generates new leads and expands the customer base.

Factors Contributing to Strong Customer Relationships:

Several factors contribute to XYZ Company's strong customer relationships:

Consistent Product Quality: Delivering reliable and high-quality products builds trust and satisfaction among customers.

Customer Feedback and Adaptation: Actively listening to customer feedback and making necessary improvements demonstrates a commitment to meeting customer needs.

Exceptional Service: Providing prompt and personalized customer service enhances the overall customer experience.

Continuous Innovation: Constantly introducing new features and technologies keeps customers engaged and excited about the brand.

Ethical Business Practices: Maintaininger  transparency, fairness, and integrity in all business dealings strengthens custom trust and loyalty.

transparency, fairness, and integrity in all business dealings strengthens custom

Building strong customer relationships is crucial for companies like XYZ Company. By focusing on product quality, exceptional service, customization, trust-building, and effective communication, XYZ Company successfully establishes and maintains strong bonds with its customers. By capturing customer value through strategies like upselling.

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a variable number of motor units is always active to produce low level tension (not enough to produce movement). we call this:

Answers

The phenomenon of having a variable number of motor units active to produce low-level tension without causing movement is referred to as motor unit recruitment.

Motor units are composed of motor neurons and the muscle fibers they innervate. During low-level tension requirements, the central nervous system selectively activates a small number of motor units to generate the necessary force without triggering visible movement. This recruitment pattern allows for fine control and precision in muscle activity.

Motor units consist of a motor neuron and the muscle fibers it connects to. The number of muscle fibers within a motor unit can vary depending on the type of muscle and the level of control required. When low-level tension is needed, the central nervous system engages in a process called motor unit recruitment.

During motor unit recruitment, the brain selectively activates a specific number of motor units to generate the required force without causing visible movement. The number of motor units recruited depends on the force needed and the level of control required for the task. For tasks that require precise and fine control, only a small number of motor units will be activated.

By recruiting a variable number of motor units, the body can finely adjust the tension in the muscles to perform tasks that require stability and control without initiating full-scale movement. This mechanism allows for delicate and nuanced movements, such as maintaining posture, stabilizing joints, or performing tasks that require minimal force output.

In summary, motor unit recruitment refers to the process of activating a variable number of motor units to generate low-level tension without visible movement. This mechanism enables the body to achieve fine control and precision in muscle activity, allowing for tasks that require stability and subtle adjustments without triggering larger movements.

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Scarcity can best be defined as ___
a. a protectionist policy that places a maximum limit on how many units can be imported.
b. government policies that influence the Aggregate Demand (AD)
c. the value of the best alternative not chosen
d. insufficient resources to satisfy unlimited wants

Answers

The study of economics is based on the idea of scarcity because it drives the central issue of how to effectively distribute limited resources to satisfy the many goals and needs of people and society. The easiest way to describe scarcity is as d. the lack of resources to satiate all demands.  

It refers to the basic economic situation where there is a finite amount of resources (such as labour, capital, and natural resources) compared to the limitless wants and demands of people and society. People and society must divide their scarce resources among conflicting alternative purposes, which implies choices and trade-offs. The study of economics is based on the idea of scarcity because it drives the central issue of how to effectively distribute limited resources to satisfy the many goals and needs of people and society.

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Effective ways to build trust with clients (health insurance
industry) through high touch / personalized service.

Answers

Building trust in the health insurance industry requires clear communication and personalized assistance. By providing timely and accurate information, along with a dedicated point of contact, clients can feel confident in their coverage. Engaging with clients, actively listening to their feedback, and promptly resolving issues further strengthens trust.

In the health insurance industry, trust is built through clear communication and personalized support. Clients need timely and accurate information about their coverage options, benefits, and claims processes. Assigning a dedicated representative who understands their unique needs ensures personalized assistance and fosters trust. Actively engaging with clients, actively listening to their concerns, and promptly addressing any issues or questions they may have demonstrates a commitment to their satisfaction. By consistently delivering high touch and personalized service, trust can be established and maintained in the health insurance industry.

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Ivanhoe Company Ltd. acquired equipment at the beginning of Year 1. The asset has an estimated useful life of 5 years. An employee has prepared depreciation schedules for this asset using two different methods, in order to compare the results of using one method with the results of using the other. Assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method and (2) the double-declining-balance method. Ivanhoe Company Ltd. prepares its financial statements under IFRS.

Year Straight-Line Double-Declining-Balance
1 $12,800 $31,200
2 12,800 18,720
3 12,800 11,232
4 12,800 2,848
5 12,800 -0-
Total $64,000 $64,000
(a)

What is the cost of the asset that is being depreciated?

Answers

The cost of the asset that is being depreciated is $64,000. The cost of an asset is the original price of the asset from which we can determine its depreciated value over the course of its useful life.

The Straight-line depreciation method evenly distributes depreciation expense across each period.                                                                                  Cost of the asset = Total depreciation expense x Useful life = $64,000 x 5 = $320,000.                                                                                                                                                             We know that the residual value is $0 since it is the salvage value of the asset.                                                                                                                                                                                                                                                    The cost of the asset is: Cost = $320,000 + Residual value=$320,000 + $0 = $320,000.                                                                                                   However, the cost of the asset being depreciated using straight-line and double-declining-balance methods should be equal.                               Hence, if we add up the straight-line depreciation expenses over the life of the asset, we should get the same value as the cost of the asset. Adding up the depreciation expenses from the straight-line method: $12,800 + $12,800 + $12,800 + $12,800 + $12,800 = $64,000.                    We see that the straight-line depreciation expenses equal the total depreciation expense under the double-declining-balance method.                                                                                                                                                                                   Since, the total depreciation expense is equal to the cost of the asset, the cost of the asset that is being depreciated is $64,000.                                                                                                                                                                                                                                                                                                                                                                                                           Read more about depreciable cost.                                                               https://brainly.com/question/15180869                                                            #SPJ11

A Company generated free cash flow to the firm of $1MM last year. We expect the Company to grow this by 14% per annum for 3 years, followed by a steady growth state of 2% per annum. The Company’s WACC is 9%. What is the value of the Company’s common stock if we assumed 100,000 shares outstanding and total debt of $5MM.

Answers

The value of the Company's common stock, assuming 100,000 shares outstanding and total debt of $5MM, can be calculated using the FCFF approach and the Gordon Growth Model.

To calculate the value of the Company's common stock, we can use the free cash flow to the firm (FCFF) approach and the Gordon Growth Model. Here's the calculation:

1. Calculate the FCFF for each year:

Year 1: $1MM

Year 2: $1MM * (1 + 14%) = $1.14MM

Year 3: $1.14MM * (1 + 14%) = $1.2996MM

Year 4 onwards: Steady growth of 2%, so the FCFF remains at $1.2996MM * 1.02 = $1.3252MM

2. Calculate the terminal value (TV) using the steady growth rate:

TV = FCFF at Year 4 / (WACC - steady growth rate)

TV = $1.3252MM / (9% - 2%) = $18.79MM

3. Calculate the present value (PV) of FCFF and TV:

PV = Year 1 FCFF / (1 + WACC)^1 + Year 2 FCFF / (1 + WACC)^2 + Year 3 FCFF / (1 + WACC)^3 + TV / (1 + WACC)^3

PV = $1MM / (1 + 9%)^1 + $1.14MM / (1 + 9%)^2 + $1.2996MM / (1 + 9%)^3 + $18.79MM / (1 + 9%)^3

4. Add the PV of FCFF and TV to get the total value of the Company's equity:

Total Value = PV + Total Debt - Cash

Total Value = PV + $5MM - $0 (assuming no cash)

5. Calculate the value per share:

Value per Share = Total Value / Number of Shares

Value per Share = (PV + $5MM) / 100,000

By plugging in the values and performing the calculations, you will be able to determine the value of the Company's common stock.

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Describe one or more principle and technique in regard to
managing:
Electronic spreadsheets In this context, a technique is a method of doing some task or
performing something. In this context a principle is a general rule that should be
followed

Answers

Principles and techniques in regard to managing electronic spreadsheets are as follows:

Principles of managing electronic spreadsheets are mentioned below:

Accuracy principle:

It is important to be as precise as possible when creating electronic spreadsheets, since even the smallest error may have serious consequences.

Completeness principle:

It is essential to have complete information for the task at hand when dealing with electronic spreadsheets. It is critical that the spreadsheet contains all relevant information to make informed choices.

Timeliness principle:

The information contained in the electronic spreadsheets should be current and up to date. It is important to update the electronic spreadsheets regularly so that they reflect the most up-to-date data.Presentation principle: It is essential that the electronic spreadsheets are well-structured and easy to read. This principle allows individuals to quickly and easily understand the information contained in the electronic spreadsheets.Techniques for managing electronic spreadsheets are as follows:

Conditional formatting:

This technique involves modifying the color or appearance of a cell or range of cells based on the content of the cells. This can be used to emphasize the information or draw attention to critical data.

AutoFilter:

This technique allows the user to sort and filter data in a variety of ways quickly. This helps the user in isolating the data that is essential for making informed decisions.

Pivot tables:

This technique helps users to analyze and summarize data in a more visually appealing manner. This makes it easier to spot trends, see relationships between data, and interpret data.

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Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.

PARAMETER VALUE

Item cost $10.00

Order cost $215.00 /order

Annual holding cost 27 % of item cost

Annual demand 22,600 units

Average weekly demand 452 /week

Standard deviation of weekly demand 25 units

Lead time 3 week

Service probability 95 %

a. Determine the order quantity and reorder point. (Use Excel’s NORMSINV( ) function to find your z-value and then round that z-value to 2 decimal places. Do not round any other intermediate calculations. Round your final answers to the nearest whole number.)

Optimal order quantity Answer units

Reorder point Answer units

b. Determine the annual holding and order costs. (Do not round any intermediate calculations. Round your final answers to 2 decimal places.) Holding cost($)Answer Ordering cost($)Answer c. Assume a price break of $50 per order was offered for purchase quantities of 2,000 units per order. If you took advantage of this price break, how much would you save annually? (Do not round any intermediate calculations (including number of setups per year). Round your final answer to 2 decimal places.) Holding cost

ordering cost

Answers

a. The order quantity is 668 units, and the reorder point is 1,356 units.

b. The annual holding cost is $1,817.00, and the annual ordering cost is $1,288.00.

c. If the price break is taken advantage of, the annual savings would be $1,800.00.

The optimal order quantity for the inventory management system is determined using the Economic Order Quantity (EOQ) formula. EOQ considers the trade-off between ordering costs and holding costs to find the most cost-effective order quantity. In this case, the EOQ formula is not provided, but the optimal order quantity can be calculated by dividing the annual demand by the number of orders placed per year. The reorder point is the inventory level at which a new order should be placed to avoid stockouts during the lead time.

The annual holding cost is calculated by multiplying the annual holding rate (27% of item cost) by the item cost. Similarly, the annual ordering cost is obtained by dividing the total annual demand by the order quantity and multiplying it by the order cost. These costs represent the expenses associated with holding inventory in stock and placing orders.

If a price break is offered, it means that a discount is provided for purchasing larger quantities. In this scenario, if the price break of $50 per order is taken advantage of, the annual savings can be calculated by multiplying the number of setups per year (annual demand divided by the quantity per order) by the savings per setup ($50). This reflects the potential cost reduction by consolidating orders and taking advantage of the discount.

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gross margin minus selling and administrative expenses equals ______.

Answers

The result of subtracting selling and administrative expenses from the gross margin is the operating income or operating profit.

Gross margin represents the difference between revenue and the cost of goods sold and is a measure of a company's profitability on its core operations.

Selling and administrative expenses, on the other hand, include costs related to marketing, advertising, salaries, rent, and other general administrative expenses incurred by the company.

When selling and administrative expenses are subtracted from the gross margin, the result is the operating income or operating profit.

This is the amount of income generated by a company's core operations before considering other non-operating expenses or income such as interest expenses or investment gains/losses.

Operating income is a key financial metric that reflects the company's ability to generate profits from its primary activities.

Operating income is an important indicator of a company's financial health and profitability as it shows the earnings generated from the company's main revenue-generating activities, excluding non-operating items.

It is used by investors, analysts, and stakeholders to assess the company's operational efficiency and profitability.

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Final answer:

Gross margin minus selling and administrative expenses equals Operating Profit. It's a valuable number in business financial analysis, showing how efficient a company is at controlling costs while generating revenue.

Explanation:

When gross margin is subtracted by selling and administrative expenses, the resulting value is known as Operating Profit (or Operating Income). Gross margin is a company's total sales revenue minus its cost of goods sold (COGS), divided by total sales revenue. Selling and administrative expenses include items such as salaries, advertisement expenses, utilities, etc. To make it clear, if a company has a gross margin of $400,000 and its selling and administrative expenses amount to $150,000, the operating profit would be $400,000 - $150,000 = $250,000.

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True or False? Asset prices follow a random walk in a weak form efficient market, but not in a semistrong form efficient market.

Answers

"Asset prices follow a random walk in a weak form efficient market, but not in a semistrong form efficient market" is false.

In a weak-form efficient market, asset prices are believed to follow a random walk, meaning that future price movements cannot be predicted based on past price information. The weak form efficiency suggests that all past market data, including historical prices and trading volumes, are already reflected in the current price, and therefore, technical analysis techniques based solely on past price patterns would not be effective in consistently predicting future price movements.

In a semistrong form efficient market, asset prices not only reflect all past market data but also all publicly available information, including news, financial statements, and other relevant public disclosures. In this form of efficiency, the random walk assumption still holds, meaning that asset prices cannot be predicted consistently based on publicly available information. Consequently, fundamental analysis techniques, which involve analyzing company-specific and market-wide information, would also be unable to consistently outperform the market.

Therefore, in both weak and semistrong form efficient markets, asset prices are believed to follow a random walk.

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Jackson Company purchased $2,000,000 of 7%, 5-year bonds from Ritter, Inc. on January 1, 2021, with interest payable on December 31. The bonds sold for $1,880,000. Using the effective-interest method, Jackson Company amortized the bond discount by $21,000 as of December 31, 2021

At December 31, 2021, the fair value of the Ritter, Inc. bonds was $1,850,000. What should Jackson Company report?

Answers

Jackson Company should report the Ritter, Inc. bonds at their fair value of $1,850,000 on the balance sheet as of December 31, 2021.

According to the effective-interest method, the bond discount is amortized over the life of the bond. In this case, Jackson Company has amortized the bond discount by $21,000 as of December 31, 2021. The carrying value of the bonds on the balance sheet would be the initial purchase price ($2,000,000) minus the accumulated bond discount amortization ($21,000), resulting in a carrying value of $1,979,000.

However, if the fair value of the bonds is lower than the carrying value, it should be reported at the lower fair value. In this scenario, the fair value of the Ritter, Inc. bonds is $1,850,000 at December 31, 2021, which is lower than the carrying value. Therefore, Jackson Company should report the bonds on the balance sheet at the lower fair value of $1,850,000. The difference between the carrying value and the fair value ($1,979,000 - $1,850,000 = $129,000) should be recognized as a loss on the income statement.

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The AC per gardener is $350 and the MB per gardener for five residents are as follows:
1. If each voter is assigned a tax share of $50, what is the political equilibrium under majority rule?
2. At Lindahl equilibrium, what is the tax share for Megan?
A.50
B.25
C.150
D.0

Answers

1. When the total marginal benefit (MB) and total marginal cost (MC) of providing a public product are equal, majority rule political equilibrium is reached. The total MC in this instance is determined by adding the $350 per gardener cost of each individual gardener.

Since the question doesn't specify the five inhabitants' combined MB, it is impossible to calculate the precise political equilibrium. However, using the information provided, we can assess the circumstance. If each voter receives a $50 tax share, there would be a total of $250 in tax income (5 residents * $50 per resident). If the gardeners were paid for with this tax money, it would pay for the cost of 250 dollars ($350) divided by 714 gardeners. We must round up to have at least one gardener because we cannot have a fraction of a gardener. Therefore, the political equilibrium under majority rule would probably include paying one gardener and allocating a $50 tax burden to each inhabitant. 2. The Lindahl equilibrium is a tax burden distribution that enables each person to contribute their marginal willingness to pay (MWP) for the common good. We must ascertain Megan's tax portion at the Lindahl equilibrium in this situation. Once more, since the residents' specific MWPs are not available, we are unable to determine the precise Lindahl equilibrium. We can examine the available possibilities, though. Option D, in which Megan's tax portion is $0, wouldn't be feasible. a legitimate Lindahl equilibrium. Each person is supposed to provide their MWP in the Lindahl equilibrium, therefore having Megan make no contributions would be against this rule. Without knowing the inhabitants' MWPs and the total cost of the gardeners, options A, B, and C cannot be calculated. Therefore, based on the facts provided, we are unable to establish Megan's precise tax share at the Lindahl equilibrium.

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Which of the following information are captured, managed and shared in Asset Management module?

I Description and date of acquisition for the asset

II Summary of income and expenses

III Depreciation method

IV The current fair market value of each asset

Answers

The information captured, managed, and shared in an Asset Management module typically includes: I) Description and date of acquisition for the asset, II) Summary of income and expenses, III) Depreciation method, and IV) The current fair market value of each asset.

In an Asset Management module, these details are recorded to track and monitor assets effectively. They help in identifying and describing each asset, understanding its acquisition history, analyzing income and expenses associated with the asset, determining the appropriate depreciation method, and assessing the current fair market value of assets for financial reporting and decision-making purposes.

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