The aim of the A-B-C approach is to classify inventory in terms of its relative importance, allowing inventory management policies and procedures to be tailored accordingly.
The A-B-C approach is a method of sorting inventory into three classes based on the relative value of the items. It prioritizes the inventory to determine which items to manage first. A items: These are the most significant items, comprising roughly 10% of the inventory but accounting for roughly 70% of the dollar value.
These are moderate importance items that account for about 20% of inventory and 20% of the dollar value. While B items are not as crucial as A items, they should be monitored regularly to prevent inventory shortages and stock-outs. items: These are the least important items, accounting for roughly 70% of the inventory but only 10% of the dollar value.
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What's the defining characteristic of a recession? When there's a recession, O real GDP falls. O the inflation rate rises. O the price level rises. O the unemployment rate falls.
The defining characteristic of a recession is that real GDP falls.
A recession is an economic downturn characterized by a significant decline in economic activity, typically measured by a contraction in real GDP (Gross Domestic Product). Real GDP represents the total value of goods and services produced within an economy, adjusted for inflation. During a recession, there is a sustained period of negative economic growth, where real GDP decreases for two consecutive quarters or more.
While other economic indicators may also be affected during a recession, such as the unemployment rate and the inflation rate, it is the decline in real GDP that distinguishes a recession. The decrease in real GDP reflects a contraction in economic output and indicates a slowdown in economic activity across various sectors.
During a recession, businesses may experience reduced sales, leading to downsizing or layoffs, which can contribute to an increase in the unemployment rate. Additionally, a recession may result in lower consumer spending, which can lead to a decrease in demand and downward pressure on prices, potentially contributing to lower inflation or even deflation.
In summary, the defining characteristic of a recession is a decline in real GDP. While other economic indicators may also be affected during a recession, such as unemployment and inflation, it is the contraction in economic output represented by real GDP that serves as the primary marker of a recession.
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QUESTION 15 Based on the data below calculate the company's annual ordering cost? Annual requirements = 7500 units Ordering cost = BD 12 Holding cost = BD 0.5 O125 O 300 O 150 45000
The company's annual ordering cost is BD 1260.36.
Annual Ordering Cost: Annual ordering cost refers to the expenses of ordering and receiving new stock within a year.
The given data to calculate the company's annual ordering cost is,
Annual requirements = 7500 units Ordering cost = BD 12 Holding cost = BD 0.5
The company's annual ordering cost can be calculated by using the following formula:
Annual ordering cost = (Annual requirements/Quantity per order) x Ordering cost
Annual requirements/Quantity per order = Number of orders placed in a year
The Quantity per order can be determined by dividing the Annual requirements by the Quantity per order. Quantity per order = Square root of ((2 x Annual requirements x Ordering cost)/Holding cost)
Quantity per order = Square root of ((2 x 7500 x 12)/0.5)
Quantity per order = Square root of (360000/0.5)
Quantity per order = Square root of 720000
Quantity per order = 848.53
Number of orders placed in a year = (Annual requirements/Quantity per order)
Number of orders placed in a year = (7500/848.53)
Number of orders placed in a year = 8.83
Annual ordering cost = (Annual requirements/Quantity per order) x Ordering cost
Annual ordering cost = (7500/848.53) x 12
Annual ordering cost = 105.03 x 12
Annual ordering cost = BD 1260.36
Therefore, the company's annual ordering cost is BD 1260.36.
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Question 15 (1 point) Which of the following statements about revenues, expenses, and net income is most correct? A positive net income always increases the owners' equity value for the organization A
Increased revenues always increase the net income for the organization, resulting in an increased owners' equity account value.
1. Revenues represent the income generated by the organization from its sales or services.
2. Net income is calculated by deducting expenses from revenues: Net Income = Revenues - Expenses.
3. Increased revenues indicate higher sales or income generated by the organization, which contributes to higher net income.
4. A positive net income indicates that the organization's revenues exceed its expenses, resulting in profitability.
5. Net income is a component of the owners' equity account, as it represents the portion of earnings that belongs to the owners. Therefore, an increase in net income leads to an increased owners' equity account value.
The complete question must be:
Which of the following statements about revenues, expenses, and net income is most correct?
A positive net income always increases the owners’ equity value for the organization
A negative net income always increases the owners’ equity value for the organization
Increased revenues always increase the net income for the organization, resulting in an increased owners’ equity account value
‘Increased expenses always decrease the net income for the organization, resulting in a decreased owners’ equity account value
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When Marilyn Monroe died, ex-husband Joe DiMaggio vowed to place fresh flowers on her grave every Sunday as long as he lived. The week after she died in 1962, a bunch of fresh flowers that the former baseball player thought appropriate for the star cost about $7. Based on actuarial tables, "Joltin' Joe" could expect to live for 30 years after the actress died. Assume that the EAR is 6.8 percent. Also, assume that the price of the flowers will increase at 3.5 percent per year, when expressed as an EAR. Assume that each year has exactly 52 weeks, and Joe began purchasing flowers the week after Marilyn died. What is the present value of this commitment? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Given data and assumption are the price of the flowers will increase at 3.5 percent per year Therefore, the present value of this commitment is $95.88.
EAR = 6.8%
Price increase rate = 3.5%
Number of years for which Joe DiMaggio would live after the actress' death = 30 years
Price of flowers on the week after Marilyn died in 1962 = $7
Solution: Calculation of annual interest rate with the given
EAR.1 + EAR = (1 + r/m)m1 + r/2
= (1 + 0.068/2)21 + r/2
= (1 + 0.034)^21 + r/2
= 1.03481 + r/2
= 1.071391 + r
= (1.0713)^251 + r
= 2.8111
r = 1.8111/25
r = 0.07244
Annual interest rate is 0.07244 or 7.24%.
We will find the cost of flowers in year
Cost of flowers in year 1 = $7 × (1 + 3.5%)^1 = $7.245Next, we will find the cost of flowers in year
Cost of flowers in year 2 = $7 × (1 + 3.5%)^2 = $7.493Then, we will find the cost of flowers in year 3.Cost of flowers in year 3 = $7 × (1 + 3.5%)^3 = $7.746Then, we will find the cost of flowers in year 30.Cost of flowers in year 30 = $7 × (1 + 3.5%)^30 = $28.75The total present value of commitment is:
PV = $7.245/(1 + 7.24%) + $7.493/(1 + 7.24%)^2 + $7.746/(1 + 7.24%)^3 + . . . + $28.75/(1 + 7.24%)^30
PV = $95.88 (rounded off to 2 decimal places)
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What is the answer for the following:
1. Your view as to the contractual basis for the Contractor's entitlement to additional time and/or payment, if any; (30 marks)
2. What extension of time, if any, you are awarding to the Contractor (30 marks)
3. What additional payment, if any, is due to the Contractor (30 marks)
4. Your view as to how the problem could have been minimised or avoided; (10 marks)
As per the contract agreement, both parties have agreed upon the timeline of completion of the project. This timeline of completion is a fundamental part of the agreement and is binding upon the contractor. In case of any delay due to factors such as weather, civil disturbances, or any other event that is beyond the control of the contractor, additional time may be granted.
The extension of time to the contractor will depend on the amount of time lost by the contractor due to reasons beyond their control. If the contractor can prove that the delay was beyond their control, then they are entitled to an extension of time that would compensate them for the time lost. This extension should not be so much that it would disrupt the overall completion of the project.
The additional payment to the contractor should be based on the expenses incurred by the contractor due to the delay. The contractor is not entitled to additional payment if they were responsible for the delay. If the delay was due to factors beyond the control of the contractor, then they should be compensated for the extra expenses incurred during this period.
The best way to minimize the problem is by addressing the issue in the contract. The contract should be comprehensive and include all the possible scenarios that may occur during the project. The contract should also include a clause that would provide the contractor with an extension of time and additional payment if the delay was due to reasons beyond their control. This would minimize any disputes and ensure that the project is completed on time.
In conclusion, the contractor is entitled to additional time and payment if the delay was due to factors beyond their control. The extension of time and additional payment should be based on the amount of time lost and expenses incurred by the contractor. The best way to minimize any problem is by addressing the issue in the contract, which would ensure that all parties are aware of their responsibilities.
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All of the following customers are exempt from receiving a risk disclosure document relating to penny stocks EXCEPT: - Accredited investors - Established customers - Investors who enter unsolicited orders to buy penny stocks - Customers of firms that generate no more than 5% of total commissions and markups from penny stock trades
Investors who enter unsolicited orders to buy penny stocks are not exempt from receiving a risk disclosure document relating to penny stocks.
The customers are exempt from receiving a risk disclosure document relating to penny stocks EXCEPT for investors who enter unsolicited orders to buy penny stocks. Here's why: When it comes to the sale of penny stocks, broker-dealers have a special duty to their customers. The Securities and Exchange Commission (SEC) defines a penny stock as a security that trades at a price of less than $5 per share. They are often traded in the over-the-counter (OTC) market or on a smaller exchange. Because they are risky, broker-dealers are required to provide investors with a disclosure document outlining the risks associated with penny stocks before they trade them. This document informs the customer about the risks involved with penny stocks and advises them on whether or not they should purchase them.
Here are the exceptions to the requirement that broker-dealers provide customers with a disclosure document relating to penny stocks: Accredited investors Established customers of firms that generate no more than 5% of total commissions and markups from penny stock trades however, Investors who enter unsolicited orders to buy penny stocks are not exempt from receiving a risk disclosure document relating to penny stocks.
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Which of the following is a question that might be answered by an MIS system? What are employment levels in the industry likely to be in five years? What is the effect on return on investment of the changing costs of supplies? What is the best trucking route for product delivery? What new products should our company create? How do actual sales for each quarter compare to projected sales?
The question that might be answered by an MIS (management information system) system is, “How do actual sales for each quarter compare to projected sales?”
MIS (Management Information System) is a type of information system that provides data and information to management to help them make decisions. The system provides managers with the data they need to evaluate business operations, progress, and results. MIS is made up of three essential components: management, information, and system. A system for managing data and information is the Management component. This component is responsible for collecting and storing data and producing reports. The information component is responsible for analyzing the data and generating reports that can be used by management to make decisions. Finally, the System component is responsible for processing the data, generating reports, and distributing them to those who need them. MIS is critical for managers in order to make effective decisions for the business. The answer to the question “How do actual sales for each quarter compare to projected sales?” is an example of what an MIS system can help with. In the above scenario, MIS would gather data from various departments such as sales and finance, analyze the data, and present a report to management detailing how actual sales compare to projected sales for each quarter. This information could then be used by managers to make decisions for the company.
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On moving to Vienna in 1781, Mozart hoped for an imperial post but waited for the Emperor to call him, because "if one makes any move oneself, one receives less pay" (letter to his Father). Explain the nature of this strategy using game theory concepts.
Mozart's strategy of waiting for the Emperor to call him in Vienna, rather than actively seeking an imperial post, can be understood using game theory concepts. By adopting a passive approach, Mozart aimed to secure a higher salary and better bargaining power, as making the first move might result in receiving less favorable terms.
In game theory, strategic decision-making considers the interplay of choices and actions among multiple players. Mozart's strategy aligns with the concept of strategic waiting or a "wait-and-see" approach. By refraining from actively pursuing an imperial post and instead waiting for the Emperor to make the first move, Mozart aimed to maximize his potential gains.
In this scenario, Mozart anticipated that if he were to make the initial move by actively seeking the post, he might receive a lower salary or less favorable terms. By allowing the Emperor to take the initiative, Mozart strategically positioned himself to negotiate from a stronger standpoint. This approach granted him the opportunity to assess the Emperor's interest and potential compensation before committing himself, enhancing his bargaining power and increasing the likelihood of securing more favorable terms.
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The Treasury notes that "A prolonged conflict will increase the risks associated with the negative terms of trade and confidence shocks for these [overseas] countries". Given the uncertainty in overseas markets, and its potential for a negative impact on the domestic Australian economy, explain how an expansionary fiscal policy might assist the government smooth the economy.
Discuss and illustrate expansionary fiscal policy will have on the Australian dollar's exchange rate with other currencies, and whether this will help or hinder efforts to smooth the economy.
An expansionary fiscal policy can help the government smooth the domestic economy in the face of uncertainty in overseas markets. By increasing government spending or reducing taxes, an expansionary fiscal policy aims to stimulate aggregate demand, encourage investment, and support economic growth. Here's how it can assist in smoothing the economy:
Stimulating Aggregate Demand: Increased government spending injects funds into the economy, leading to higher demand for goods and services. This can help offset any negative impact caused by uncertainties in overseas markets, as it supports domestic consumption and business activity.
Boosting Investment: Expansionary fiscal policy can include measures such as tax incentives or subsidies for businesses. These measures encourage investment, which can enhance productivity, job creation, and economic growth, thereby helping to mitigate the effects of overseas uncertainties.
Income and Employment Support: Expansionary fiscal policy can include provisions for income support or job creation programs, which can help stabilize domestic income levels and employment rates. This support can provide a buffer against negative shocks originating from overseas markets.
Now, let's discuss the impact of expansionary fiscal policy on the Australian dollar's exchange rate and its implications for smoothing the economy:
Expansionary fiscal policy, especially through increased government spending, can lead to higher fiscal deficits. This increased borrowing by the government may raise concerns about the sustainability of public debt, potentially leading to a depreciation of the Australian dollar's exchange rate.
A depreciation of the Australian dollar can have both positive and negative effects on the domestic economy. On the positive side, it can boost exports by making Australian goods and services relatively cheaper for foreign buyers. This can help offset any decline in demand from overseas markets and support domestic industries.
However, a depreciating currency can also have negative implications. It can increase the cost of imported goods, potentially leading to higher inflation. This can erode purchasing power and impact consumers' spending patterns. Additionally, a weaker exchange rate can make imports more expensive, which may impact businesses reliant on imported inputs.
Overall, the impact of expansionary fiscal policy on the exchange rate depends on various factors and market dynamics. While a depreciation may offer some benefits in terms of export competitiveness, it can also pose challenges such as higher inflation. The government needs to carefully consider the potential trade-offs and implement a comprehensive policy mix to effectively smooth the economy in the face of overseas uncertainties.
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Today’s fast-paced, high-change project environments, coupled with organizations where formal project management may not be its strong suit, are often short on the necessary upfront planning.
Search relevant project management news in the media on a distressed project in Canada or any location in North America and provide practical ideas and strategies for the prevention, behaviour detection, analysis, recovery and control of the distressed projects, focusing on where the project is in relation to its original goals/targets, and realigning the project objectives.
Describe the continuous process improvements model as a way to improve the quality of project products, and to sustain a competitive position in fast-paced information-age industries
Distressed project management is the recovery of a failing project. Continuous process improvements model is a way to improve the quality of project products and sustain a competitive position in fast-paced information-age industries.
According to the latest news, the Quebec government has recently ordered a review of a $2 billion electric train project between Montreal and the suburb of Deux-Montagnes. As the completion of this project is delayed, let us discuss practical ideas and strategies for the prevention, behavior detection, analysis, recovery, and control of distressed projects:
1. Prevention: Distressed projects may be prevented by considering the following points:
Maintaining clear project objectives and direction Adequate planning and scope management Comprehensive communication and stakeholder management Having competent staff with clearly defined roles2. Behavior detection: If you can recognize the signs of distressed projects, you can react quickly to the problem. Here are some early warning indicators that a project is in trouble:
Conflicts and missed deadlines Rising costs, poor quality, or fluctuating performance Inadequate planning and forecasting Insufficient management support and funding3. Analysis and Recovery: Distressed projects can be analyzed, diagnosed, and recovered using the following steps:
Initial Assessment of the Project's healthRecovery Plan PreparationExecution of the Recovery PlanControl and monitoring of progress to ensure the project is on track4. Control: Successful project control measures include the following:
Establishing and communicating clear project goals and objectivesMaintaining a comprehensive and up-to-date project planScheduling and forecastingRisk managementQuality assurance5. Continuous Process Improvement Model: As a means to improve the quality of project products and to maintain a competitive position in fast-paced information-age industries, a continuous process improvement model is used. The following are the main stages of this model:
Identify key business processes and document themMeasure the performance of the processes and identify improvement opportunitiesAnalyze and improve the processImplement and monitor the improved processStart over and identify further improvement opportunitiesLearn more about management:-
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Mulroney Corp. is considering two mutually exclusive projects. Both require an initial investment of $11,400 at t = 0. Project X has an expected life of 2 years with after-tax cash inflows of $6,500 and $7,000 at the end of Years 1 and 2, respectively. In addition, Project X can be repeated at the end of Year 2 with no changes in its cash flows. Project Y has an expected life of 4 years with after-tax cash inflows of $4,000 at the end of each of the next 4 years. Each project has a WACC of 8%. Using the replacement chain approach, what is the NPV of the most profitable project? Do not round the intermediate calculations and round the final answer to the nearest whole number.
a. $2,145 b. $2,693 c. $1,996 d. $1,849 e. $1,151
The most profitable project based on NPV using the replacement chain approach is Project X with an NPV of $24,127 (rounded to the nearest whole number). The correct answer is (a) $2,145.
To determine the NPV of the most profitable project using the replacement chain approach, we need to calculate the NPV of each project and compare them.
Project X:
Initial investment (t = 0): -$11,400
Cash inflows: $6,500 (Year 1), $7,000 (Year 2)
WACC: 8%
NPV of Project X = (Cash inflow / (1 + WACC)^n) - Initial investment
Year 1 NPV: $6,500 / (1 + 0.08)^1 - $11,400 = $6,018.52
Year 2 NPV: $7,000 / (1 + 0.08)^2 - $11,400 = $6,045.11
Total NPV for repeated cycle: 2 * ($6,018.52 + $6,045.11) = $24,126.86
Project Y:
Initial investment (t = 0): -$11,400
Cash inflows: $4,000 (Year 1-4)
WACC: 8%
NPV of Project Y = (Cash inflow / (1 + WACC)^n) - Initial investment
Year 1-4 NPV: $4,000 / (1 + 0.08)^1 + $4,000 / (1 + 0.08)^2 + $4,000 / (1 + 0.08)^3 + $4,000 / (1 + 0.08)^4 - $11,400 = $12,032.20
Comparing the NPVs, we find that the NPV of Project X (with repeated cycle) is $24,126.86, while the NPV of Project Y is $12,032.20.
Therefore, the most profitable project based on NPV using the replacement chain approach is Project X with an NPV of $24,127 (rounded to the nearest whole number). The correct answer is (a) $2,145.
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A plant distributes its products by truck. The exponential average loading time per truck at the loading facility is 20 minutes. Trucks arrive at a rate of 2/hour. Management feels that the existing loading facility is more than adequate. However, the drivers complain that they have to wait more than half of the time. Analyze the situation and find how much money the company can save if the waiting time of a truck is figured at P10/hr and the plant is in operation 8 hours per day. An automatic device that can load 10 trucks per hour is available at a cost of P90/day over the cost of the existing facility.
In this scenario, a plant distributes its products by truck, and the average loading time per truck at the loading facility is 20 minutes, following an exponential distribution. Trucks arrive at a rate of 2 per hour. Although management believes the existing loading facility is sufficient, the drivers complain about excessive waiting times.
To analyze the situation, we need to calculate the average waiting time for a truck at the loading facility. Given that trucks arrive at a rate of 2 per hour and the average loading time is 20 minutes, we can use queuing theory to determine the average waiting time in the system. The waiting time is affected by the arrival rate, service rate, and the number of servers (loading devices).
If the drivers are experiencing excessive waiting times, it suggests that the existing loading facility is not efficient enough to handle the truck arrivals. Introducing an automatic device that can load 10 trucks per hour would increase the service rate, reducing the waiting time for the trucks.
To calculate the potential cost savings, we need to determine the total waiting time for the trucks with the existing facility and compare it to the waiting time with the automatic device. The cost of waiting time can be multiplied by the waiting time per truck, the number of trucks per day, and the cost per hour to find the daily cost savings. By subtracting the cost of the automatic device from the daily cost savings, we can determine the net savings for the company.
By conducting these calculations, the company can assess the cost implications of improving the loading facility and make an informed decision on whether to invest in the automatic device based on the potential savings it would generate.
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Oak Dale LLC is adding a new building to its apartment complex. They have created a table of the project and have assigned a letter to each activity and its predecessor(s):
Oak Dale LLC is adding a new building to its apartment complex. They have created a table of the project and have assigned a letter to each activity and its predecessor(s): Figure 2, of the following correctly represents the project's network diagram. Thus, option (2) is correct.
Three activities, A, B, and C, are present at the starting position. Following the completion of these tasks, the tasks A, B, and C are then followed by the tasks D, E, and F.
Action G starts after action D is finished, and activity H begins after activities E and F are finished. The Finish point symbolizes the finish line.
Therefore, option (b) is correct.
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Your question is incomplete, but most probably the full question was.
Oak Dale LLC is adding a new building to its apartment complex. They have created a table of the project and have assigned a letter to each activity and its predecessor(s):
Activity Immediate Predecessor
A -
B -
C -
D A
E B
F C
G D
H E, F
Which of the following correctly represents the project's network diagram?
Select Diagram
In the answer field below, write the number that corresponds to your answer.
1. Figure 1
2. Figure 2
3. Figure 3
The First Order Corporation considers a major worldwide expansion. It currently has 40 million outstanding shares trading at $10 per share. Equity has an estimated beta of 1.8. The risk-free rate is 3%, while the market risk premium is 5%. It also has 400,000 outstanding bonds with 7.0% coupon rate, 20 years to maturity and $1,000 par. The bonds currently trade at par. The corporate tax rate is 25%. The project will require an immediate investment of $150 million and will produce a pre-tax $24 million in perpetuity. Should The First Order accept the project? Show numerically (NPV) why they should or shouldn’t accept the project.
The numerical NPV obtained shows that The First Order Corporation should accept the project. If the NPV is positive, the project should be accepted because it is expected to generate a positive return for the company.
Given information:
First Order Corporation has 40 million outstanding shares trading at $10 per share.
Equity has an estimated beta of 1.8.400,000 outstanding bonds with a 7.0% coupon rate, 20 years to maturity, and $1,000 par The corporates tax rate is 25%.
The project will require an immediate investment of $150 million and will produce a pre-tax $24 million in perpetuity.
Risk-free rate = 3%Market risk premium = 5%
Calculation of cost of equity, rᵉ Market risk premium = 5%Equity, has an estimated beta of 1.8.
Using CAPM, we get:rᵉ = Rf + β(Rm-Rf)rᵉ = 0.03 + 1.8(0.05)rᵉ = 0.12 or 12%
Calculation of cost of debt, rᵈThe coupon rate is 7%, and bonds currently trade at par.
Using the formula for the cost of debt: rᵈ = YTM = Coupon Rate.rᵈ = 7%
Calculation of WACC Weight of equity = We = 40/(40+400) = 0.0909 or 9.09%
Weight of debt = Wd = 400/(40+400) = 0.9091 or 90.91%
WACC = We rᵉ + Wd rᵈ (1-T)WACC = 0.0909 x 0.12 + 0.9091 x 0.07 (1-0.25)WACC = 0.0944 or 9.44%
Calculation of Net Present Value (NPV) of the Project NPV = -Initial Investment + Sum(Present Value of Cash Flows)NPV = -150 + [24/0.0944]NPV = $53.20 million
Since the NPV is positive, the project should be accepted because it is expected to generate a positive return for the company.
Thus, the numerical NPV obtained shows that The First Order Corporation should accept the project.
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ABC Limited also manufactures a specialised accessory for automobiles called ‘Stabiles’, which is a type of box which can be easily fixed in the front compartment of any vehicle. The company has been in operation for two years and, now that the production process has been established and refined, the directors have decided to focus on the income and costs arising from activities. The managing director has recently read an article about product costing and, in particular, absorption and variable costing and is keen to understand how this would affect company profits.
Product costing is an important aspect of determining the profit earned by a company. This refers to the cost of the product that a company produces. Product costing involves a variety of methods, including absorption and variable costing.
Absorption costing is a traditional method that includes both variable and fixed costs in the cost of the product. Variable costing, on the other hand, involves only the variable cost of production in the cost of the product. Therefore, both methods have different impacts on company profits.In the case of ABC Limited, if the company uses absorption costing, it would include both variable and fixed costs in the cost of the product. In contrast, if the company uses variable costing, it would only include the variable costs of production. As a result, variable costing might increase company profits since it eliminates the allocation of fixed costs that might not necessarily be incurred due to the production of a product.The managing director can use both methods to evaluate the cost of producing the accessory ‘Stabiles’. By using both methods, the managing director can determine which method would lead to increased company profits. Furthermore, the managing director can use product costing to identify cost drivers, or the cost incurred by a product's production, to better manage and control costs, and to determine the optimal pricing strategy for the product. Therefore, product costing can help a company make informed business decisions that would increase profits.
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As a shareholder of Newman Co., you are trying to evaluate its investment. Which measure is the most appropriate to use? Return on assets Market-to-book ratio Return on capital Return on equity Economic value added
As a shareholder of Newman Co., the most appropriate measure to evaluate its investment would be the Return on Equity (ROE).
Return on Equity is a financial ratio that indicates the profitability of a company's shareholders' investments. It measures how effectively the company generates profits from the shareholders' equity. ROE is calculated by dividing net income by shareholders' equity.
By analyzing the ROE, shareholders can assess the company's ability to generate returns on the capital invested by shareholders. It provides insight into the company's profitability and efficiency in utilizing shareholders' funds to generate earnings.
While other measures such as Return on Assets (ROA), Return on Capital (ROC), and Economic Value Added (EVA) are also valuable indicators, ROE specifically focuses on the return generated for shareholders, making it highly relevant for evaluating an investment from a shareholder's perspective.
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Quality can best be described as a blank activity?
Options: 1) Buyer
2) Supply chain 3) Purchasing 4) Corporate 5) Executive.
The correct option is (2). Quality can best be described as a supply chain activity.
In the context of business and manufacturing, quality is closely tied to the overall supply chain process. It encompasses the activities and processes involved in ensuring that products or services meet or exceed customer expectations and requirements.
The supply chain refers to the entire network of organizations, resources, activities, and technologies involved in the production and delivery of goods or services to customers. Quality control and assurance play a crucial role in the supply chain by ensuring that products or services consistently meet quality standards throughout the production and distribution process.
Within the supply chain, various activities contribute to achieving and maintaining quality. These activities include supplier selection and management, quality inspections, product testing, process monitoring, corrective actions, and continuous improvement efforts.
By integrating quality considerations into the supply chain, organizations can enhance customer satisfaction, minimize defects and errors, reduce waste, improve efficiency, and maintain a competitive advantage in the market. Therefore, quality is primarily viewed as a supply chain activity rather than solely being associated with other options such as buyer, purchasing, corporate, or executive functions.
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Benchmark Metrics Inc. (BMI), an all-equity financed firm, reported EPS of $4.05 in 2008. Despite the economic downturn, BMI is confident regarding its current investment opportunities. But due to the financial crisis, BMI does not wish to fund these investments externally. The Board has therefore decided to suspend its stock repurchase plan and cut its dividend to $1.04 per share (vs. almost $2 per share in 2007), and retain these funds instead. The firm has just paid the 2008 dividend, and BMI plans to keep its dividend at $1.04 per share in 2009 as well. In subsequent years, it expects its growth opportunities to slow, and it will still be able to fund its growth internally with a target 41% dividend payout ratio, and reinitiating its stock repurchase plan for a total payout rate of 57%. (All dividends and repurchases occur at the end of each year.) Suppose BMI's existing operations will continue to generate the current level of earnings per share in the future. Assume further that the return on new investment is 15%, and that reinvestments will account for all future earnings growth (if any). Finally, assume BMI's equity cost of capital is 10%.
a. Estimate BMI's EPS in 2009 and 2010 (before any share repurchases).
b. What is the value of a share of BMI at the start of 2009 (end of 2008)? Hint. Make sure to round all intermediate calculations to at least four decimal places.
Benchmark Metrics Inc. (BMI), an all-equity financed firm, reported EPS of $4.05 in 2008. Despite the economic downturn, BMI is confident regarding its current investment opportunities. But due to the financial crisis, BMI does not wish to fund these investments externally. (a)the estimated EPS for BMI in 2009 is $4.05.(b) the estimated value of a share of BMI at the start of 2009 (end of 2008) is approximately $98.0826.
To estimate BMI's EPS in 2009 and 2010, we need to calculate the retained earnings and the number of shares outstanding.
a. Estimate BMI's EPS in 2009:
EPS in 2008 = $4.05
Dividend per share in 2008 = $1.04
Retained earnings per share in 2008 = EPS in 2008 - Dividend per share in 2008
= $4.05 - $1.04
= $3.01
Retained earnings per share in 2009 = Retained earnings per share in 2008
EPS in 2009 = Retained earnings per share in 2009 + Dividend per share in 2009
= $3.01 + $1.04
= $4.05
Therefore, the estimated EPS for BMI in 2009 is $4.05.
b. To calculate the value of a share of BMI at the start of 2009 (end of 2008), we can use the Gordon growth model:
Dividend per share in 2009 = $1.04
Dividend payout ratio = 41%
Retention ratio = 1 - Dividend payout ratio = 1 - 0.41 = 0.59
Return on new investment = 15%
Equity cost of capital = 10%
Expected growth rate in dividends = Return on new investment * Retention ratio
= 0.15 * 0.59
= 0.0885
Expected dividend per share in 2010 = Dividend per share in 2009 * (1 + Expected growth rate in dividends)
= $1.04 * (1 + 0.0885)
= $1.12896 (rounded to four decimal places)
Next, we can calculate the value of the stock using the Gordon growth model:
Value of a share of BMI = Dividend per share in 2010 / (Equity cost of capital - Expected growth rate in dividends)
= $1.12896 / (0.10 - 0.0885)
= $1.12896 / 0.0115
= $98.0826 (rounded to four decimal places)
Therefore, the estimated value of a share of BMI at the start of 2009 (end of 2008) is approximately $98.0826.
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11. Mike offers to service Lana’s heating and air conditioning system for one year for $500. Under the mirror image rule, Lana’s response will be considered an acceptance if the terms of the acceptance
Group of answer choices
change the items offered, but do not change the price.
change both the price and the items offered.
exactly mirror those of the offer.
change the price, but do not change the items offered.
The mirror image rule is a principle of common law, which dictates that an offer and an acceptance of that offer must match in order for a valid contract to exist.
This means that the acceptance of an offer must mirror the terms of the offer exactly, with no changes to the terms, in order for a binding agreement to exist.If the terms of the acceptance alter the terms of the offer, even slightly, then the acceptance is considered a counter-offer, which rejects the original offer. For instance, if Mike offers to service Lana’s heating and air conditioning system for one year for $500 and Lana responds by agreeing to pay $400, then the acceptance is considered a counter-offer, and the original offer is rejected unless Mike accepts Lana’s counter-offer in return. However, if Lana agrees to pay the full price of $500, but requests that Mike service her heating and air conditioning system twice a year instead of once a year, then the acceptance is still considered valid, even though the terms of the original offer have been modified slightly.
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Which of the following factors should be investigated in order to increase the likelihood of sales success? A) Product knowledge and benefits B) Knowledge of competitors' products C) sales presentation planning D) All Answers are correct
D) All answers are correct. To increase the likelihood of sales success, it is essential to investigate multiple factors that contribute to effective sales performance. Each of the options mentioned plays a significant role in achieving sales success:
A) Product knowledge and benefits: Having a deep understanding of the product or service being sold is crucial. Sales professionals should be able to effectively communicate the features, advantages, and benefits of their offering to potential customers.
B) Knowledge of competitors' products: Understanding the products and services offered by competitors allows salespeople to position their offerings effectively. By knowing the strengths and weaknesses of competing products, sales professionals can highlight the unique value and advantages of their own offerings.
C) Sales presentation planning: Planning and preparing for sales presentations is essential for delivering a persuasive and impactful pitch. Sales professionals should carefully plan their approach, tailor their presentation to the specific needs and interests of the customer, and anticipate potential objections.
By investigating and addressing all of these factors, sales professionals can enhance their chances of success and effectively engage with potential customers, leading to increased sales performance.
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If the rate of inflation unexpectedly increases, which of the following individuals will suffer a loss? O An individual whose wage is indexed to the price level O The borrower who has a home mortgage with a fixed interest rate O The holder of a government bond that has an annual fixed interest payment in dollars O An individual who has a significant dollar amount of student debt O An individual who receives a percentage increase in salary that exceeds the percentage increase in inflation 0 Question 49(Multiple Choice Worth 1 points) (04.05 MC) How does inflation influence the interest rate and the demand for money in the economy? O When prices fall, the interest rate is also expected to fall, and the demand for money decreases. O When prices fall, the interest rate is expected to rise, and the demand for money is unaffected. O When prices rise, the interest rate is also expected to rise, and the demand for money increases. O When prices rise, the interest rate is expected to fall, and the demand for money is unaffected. O When prices rise, the interest rate is expected to fall, and the demand for money increases.
the correct answer is: When prices rise, the interest rate is expected to rise, and the demand for money increases.
Individuals who will suffer a loss if the rate of inflation unexpectedly increases are:
- The borrower who has a home mortgage with a fixed interest rate: Inflation erodes the value of money over time, meaning the borrower will be repaying their mortgage with less valuable dollars, resulting in a higher real burden of debt.
- The holder of a government bond that has an annual fixed interest payment in dollars: Inflation reduces the purchasing power of the interest payments received, leading to a decrease in the real return on the bond investment.
- An individual who has a significant dollar amount of student debt: Similar to the borrower with a mortgage, inflation diminishes the value of money, causing the individual to repay their debt with dollars that have a lower real value.
An individual whose wage is indexed to the price level and an individual who receives a percentage increase in salary that exceeds the percentage increase in inflation would not suffer a loss. In the former case, their wages would automatically adjust to keep pace with inflation, ensuring their purchasing power remains relatively stable. In the latter case, their salary increase would outpace the rate of inflation, resulting in a real wage gain.
In summary, borrowers with fixed-rate mortgages, holders of government bonds with fixed interest payments, and individuals with significant student debt will experience losses if the rate of inflation unexpectedly increases. Conversely, those whose wages are indexed to the price level or receive salary increases exceeding inflation will not suffer a loss.
Regarding the second question:
Inflation influences the interest rate and the demand for money in the economy as follows: When prices rise, the interest rate is expected to rise, and the demand for money increases. This relationship stems from the fact that as prices increase, individuals and businesses require more money to conduct transactions and maintain their desired level of cash balances. To meet this increased demand for money, interest rates typically rise to incentivize saving and reduce borrowing, thereby managing the growth of the money supply.
Therefore, the correct answer is: When prices rise, the interest rate is expected to rise, and the demand for money increases.
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Assume that the State of Florida has recently passed a statute that prohibits any sole proprietor, partnership, or corporation operating a business in the state from contributing any funds or property to political election campaigns.
This statute is challenged by a group of business law students taking a course at Polk State College. Your business also files a legal action seeking to invalidate the state law.
Your business desires to make a donation of $10,000 or more to your former bookkeeper, Homer Simpson, in the upcoming election for the Mayor of Springfield, Florida, where you are planning on opening up a store or facility to carry on your business.
1 In what state and/or federal court could the business law students file their legal action? Who would be the plaintiffs and defendants in both actions?
2. The party named as defendant in the students’ action files a motion to dismiss their legal action on the ground that they do not have standing to sue. What will be the likely result of this motion to dismiss? Explain your answer.
3. On what legal or constitutional ground(s) should your business challenge the state law?
4. Based on the current case law, what is the likely result of your business’s legal challenge to the state law?
1. The business law students could file their legal action in both state and federal courts. In the state court, they could file the action in the Circuit Court of the county where Polk State College is located. In the federal court, they could file the action in the United States District Court for the Middle District of Florida.
The plaintiffs in both actions would be the business law students who are challenging the constitutionality of the statute. The defendants in the state court action would be the State of Florida or any relevant state agency responsible for enforcing the statute. In the federal court action, the defendants would be the state officials responsible for enforcing the statute as well as the State of Florida.
2. The likely result of the motion to dismiss filed by the defendant, claiming lack of standing for the business law students, would depend on the specific legal standards and requirements for standing in the jurisdiction. Generally, in order to have standing, the plaintiffs must demonstrate that they have suffered or will suffer an injury that is concrete, particularized, and actual or imminent. If the court finds that the business law students have not suffered or are not likely to suffer a direct injury as a result of the statute, the motion to dismiss may be granted, and their legal action may be dismissed.
3. Your business could challenge the state law on several legal or constitutional grounds, such as:
- First Amendment: Argue that the statute infringes upon the freedom of speech and political expression rights of businesses by prohibiting them from contributing funds or property to political election campaigns.
- Equal Protection: Claim that the statute violates the Equal Protection Clause of the Fourteenth Amendment by treating businesses differently from other entities or individuals that are allowed to contribute to political campaigns.
- Due Process: Assert that the statute deprives businesses of their property rights without due process of law, as it restricts their ability to engage in political activities.
4. The likely result of your business's legal challenge to the state law would depend on the specific facts and circumstances of the case, as well as the interpretation and application of relevant legal principles by the court. Based on the current case law and legal arguments presented, it is difficult to predict the exact outcome. Courts may consider factors such as the government's interest in regulating campaign finance, the potential impact on political corruption or the appearance thereof, and the level of scrutiny applied to the constitutional claims raised by your business. It would be important to consult with legal counsel familiar with the specific jurisdiction and relevant case law to assess the likelihood of success in challenging the state law.
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Make a Summary about the International Organization for
Standartization (9000, 9001, 9002, 9003 and 9004)
The International Organization for Standardization (ISO) has developed a series of standards known as the ISO 9000 series.
These standards provide guidelines and requirements for quality management systems. They are designed to help organizations ensure that they are meeting the needs and expectations of their customers, while also improving their overall performance.The ISO 9000 series consists of several standards, including ISO 9000, ISO 9001, ISO 9002, ISO 9003, and ISO 9004. ISO 9000 provides an overview of the series and explains the basic concepts of quality management.ISO 9001 is the most widely used standard in the series. It sets out the requirements for a quality management system that organizations can use to demonstrate their ability to consistently provide products and services that meet customer and regulatory requirements.ISO 9002 outlines the requirements for a quality management system for organizations that do not design or develop products. This standard is intended for organizations that provide services, rather than products.ISO 9003 outlines the requirements for a quality management system for organizations that inspect and test products. This standard is intended for organizations that are involved in quality control and do not design or manufacture products.ISO 9004 provides guidelines for organizations that wish to improve their overall performance. It provides guidance on how to implement a quality management system that can help organizations achieve their objectives and improve their efficiency.
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You own a put option on a Brambles share with an exercise price of $15. The option costs $2. The option will expire in exactly six months times. Draw a profit diagram showing the profit of the put as a function of the share price at expiration.
If the share price at expiration is below the exercise price ($15), the put option will be profitable as the holder can sell the shares at a higher price. The profit will be equal to the exercise price minus the share price minus the cost of the option. In this case, the profit is capped at the cost of the option since the share price cannot be lower than zero.
If the share price at expiration is above the exercise price, the put option will expire worthless, resulting in a loss equal to the cost of the option.
Let's assume the share price at expiration ranges from $0 to $30. We can now draw the profit diagram as follows:
Share Price at Expiration:
0 $2 Loss
15 $13 Profit
30 $13 Profit
A put option is a financial contract that gives the holder the right, but not the obligation, to sell a specific asset (in this case, Brambles shares) at a predetermined price (exercise price) within a specified period of time (expiration). The profit diagram illustrates the potential profit or loss for the holder of the put option at expiration, based on different share prices.
In this scenario, the put option has an exercise price of $15 and costs $2. If the share price at expiration is below $15, the put option will be profitable. The profit is calculated by subtracting the share price from the exercise price and deducting the cost of the option. If the share price is above $15, the put option will expire worthless, resulting in a loss equal to the cost of the option.
By drawing the profit diagram, we can visualize the potential profit or loss at different share prices at expiration. It shows that the put option provides a limited downside protection as the maximum loss is limited to the cost of the option.
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help me with question in project scope and time management As a member of the TAFTA (The Association for the Aged) governing body, you were allocated the task of planning a 5km charity fun run to raise funds for TAFTA. Research is required to find out what the key deliverables would be in planning a charity fun run. Develop a project scope management plan as part of your planning for the implementation of this fundraising project. Your scope management plan should outline how each of the following steps would be effected in the report you are required to compile on the following: Answer ALL the questions in this section. Question 1 Give a brief background of the 5km charity fun run project you will be working on.
State the projects objective, its constraints, resources required, the available budget and schedule.
Question 2 Draw up Business Case for the above project.
project scope and time management the subject
Question 1: brief background of the 5km charity fun run project: the 5km charity fun run is a fundraising event organized by TAFTA (The Association for the Aged). Its objective is to raise funds for TAFTA's initiatives and support services for the elderly. The event will involve participants running a 5km distance, and donations will be collected from participants, sponsors, and the community.
Key deliverables:
- Event planning and coordination
- Marketing and promotion
- Participant registration and management
- Route planning and logistics
- Volunteer management
- Fundraising and donation collection
Constraints:
- Limited time for planning and execution
- Limited financial resources
- Compliance with local regulations and permits
- Ensuring participant safety and well-being
Resources required:
- Event venue or route
- Marketing materials and channels
- Registration system and tools
- Volunteers for various roles
- Safety measures and medical support
Available budget and schedule:
The budget for the event is allocated at $X, which includes expenses for marketing, venue, permits, logistics, and other associated costs. The event is scheduled to take place on [date], and the planning phase is expected to be completed by [date].
Question 2:
Business Case for the project:
The 5km charity fun run project presents a compelling business case for TAFTA. It aligns with TAFTA's mission of supporting the elderly and requires a moderate investment of resources. By organizing the event, TAFTA can raise funds to sustain and expand their initiatives, which include healthcare services, community programs, and support for elderly individuals in need.
Benefits:
- Financial support: The charity fun run has the potential to generate significant funds through participant donations, sponsorships, and community contributions. These funds will directly contribute to TAFTA's mission and enhance their ability to provide crucial services to the elderly.
- Community engagement: The event offers an opportunity to engage with the community, promote TAFTA's cause, and raise awareness about the challenges faced by the elderly. It fosters a sense of community involvement and encourages individuals and businesses to contribute to a worthy cause.
- Public relations and brand image: By successfully organizing the charity fun run, TAFTA can enhance its public image and build positive relationships with participants, sponsors, and the community. This will further increase visibility and support for TAFTA's initiatives.
- Networking and partnerships: The event provides a platform to establish connections with potential sponsors, volunteers, and community partners who share TAFTA's mission. These relationships can lead to long-term collaborations and future fundraising opportunities.
- Health and well-being promotion: The 5km run promotes physical activity and healthy lifestyles, aligning with TAFTA's commitment to the well-being of the elderly. It encourages participants of all ages to engage in exercise while supporting a charitable cause.
By considering these factors, the 5km charity fun run project demonstrates a clear business case for TAFTA, providing a valuable opportunity to raise funds, engage with the community, enhance the organization's reputation, and promote the well-being of the elderly.
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[Answer the given questions under each part]
PART 1: Setting up a Brick and Mortar Store: [06 Marks]
NO PLAGIARISM PLEASE
1-Decide any exclusive store you wish to start.
2-State your target customers?
3- Explain the breadth and length of merchandise you will offer to your customers.
4-Store Location - Where will you plan to locate your store(s)? Give Reason
5-What retail image you wish to create through your store atmosphere? How will you plan
(i) Store Exterior -
6- Storefront / Signage
7- Marquee (a large tent used for social or commercial functions)
8-Entrances, Parking area / Display windows etc.
(ii) Store interior –
9-Store layout you wish to choose (with reasons)
10- Lighting / Fixtures (furniture or equipment)
11- Flooring / Merchandise
12-Personnel / Number and locations of cash counters
13-Temperature / Width of passages (corridor)
14- Scents, sound / Self service
15-Cleanliness / Technology/automation
The initial phase in opening a brick-and-mortar store is choosing the right items to sell, deciding the target customers, deciding on the breadth and length of merchandise, selecting the location of the store(s), and creating the appropriate retail image through the store atmosphere. These five components are critical to the success of any physical store.
1. Pick any exclusive store you wish to start: A fashion store, for example.2. State your target customers: The target customers are young adults who are fashion-conscious.3. Explain the breadth and length of merchandise you will offer to your customers: The store will provide trendy clothing, accessories, footwear, and cosmetics.4. Store Location: The store will be located in a commercial area close to a famous shopping mall. There will be an enormous flow of shoppers in the region.5. What retail image you wish to create through your store atmosphere? How will you plan?(i) Store Exterior: The store exterior will be bright and inviting to potential customers. It will be in line with the most recent fashion trends, with the goal of attracting fashion-conscious young adults. The signage will be easy to read, with bold lettering and distinctive lighting. The display windows will be utilized to showcase the most recent fashion trends. The parking area will be located adjacent to the store. Finally, the cleanliness of the store exterior will be given priority.(ii) Store interior: The layout will be open, with several aisles and corridors. The store will be arranged according to product category. In a prominent position, we will have customer service personnel who will be available to assist customers. The shop will have enough lighting, which will be strategically positioned to ensure that the goods are properly illuminated. The flooring will be made of ceramic tiles, and the walls will be painted in soft, welcoming colors. The merchandise will be properly arranged and kept clean and tidy. The store will have a large number of cash counters, with employees who are knowledgeable about fashion trends. The store will have a moderate temperature, and the passages will be spacious to allow for easy movement. To improve the shopping experience, soft music will be played in the background. Finally, self-service will be encouraged, and technology will be used to automate various store processes.
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You are the CFO of Starbucks, and you consider investing in a new venture and specifically to introduce the Starbucks smart phone. Why the Starbuck’s WACC is not the appropriate discount rate to use for NPV calculations? Briefly explain how you could estimate the appropriate discount rate.
As a CFO of Starbucks, if you are considering investing in a new venture and introducing the Starbucks smart phone, then the Starbucks Weighted Average Cost of Capital (WACC) may not be the appropriate discount rate to use for Net Present Value (NPV) calculations because WACC reflects the average cost of capital for the firm's current operations and may not take into account the specific risks associated with the new venture.
Furthermore, introducing a new product line that is different from the existing operations of Starbucks may require a different cost of capital that reflects the new venture's risks.
To estimate the appropriate discount rate, the following steps could be taken:
Estimate the Cost of Equity: The cost of equity reflects the rate of return that investors expect to receive for investing in the firm's equity shares. To estimate the cost of equity, you can use the Capital Asset Pricing Model (CAPM) or other models that take into account the risks associated with the new venture.
Estimate the Cost of Debt: The cost of debt reflects the interest rate that Starbucks would have to pay to borrow money for the new venture. This can be estimated by looking at the interest rates on similar loans taken out by other firms.
Estimate the Proportions of Debt and Equity: The proportions of debt and equity that Starbucks would use to finance the new venture should be estimated, as they will affect the overall cost of capital.
Calculate the Weighted Average Cost of Capital (WACC): The WACC can be calculated by multiplying the cost of equity by the proportion of equity, adding the cost of debt multiplied by the proportion of debt, and then adding these two figures together. The resulting figure represents the appropriate discount rate to use for NPV calculations for the new venture.
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ECN 300 Money and Banking-DQs
1. Describe the major goals of the Fed and how well they have been achieved in the past 20 years.
2. Compare and contrast the output gap, the unemployment gap, and the inflations gap.
3. Why have rules for monetary policy based on money growth been unsuccessful in recent years?
4. Would it make sense for a central bank to try inflation targeting by using the Taylor rule? What problems might the central bank encounter in trying to do so?
The Fed has been relatively successful in achieving these goals in the past 20 years. The US economy has grown steadily, unemployment has fallen, and inflation has been kept under control. However, there have been some challenges.
The major goals of the Fed are to:
Promote economic growth
Keep unemployment low
Keep inflation low
The output gap is the difference between the actual output of an economy and its potential output. The unemployment gap is the difference between the actual unemployment rate and the natural unemployment rate. The inflation gap is the difference between the actual inflation rate and the target inflation rate. The output gap, unemployment gap, and inflation gap are all important measures of the health of an economy. A positive output gap indicates that the economy is growing faster than its potential, which can lead to inflation. A negative output gap indicates that the economy is growing slower than its potential, which can lead to unemployment. Rules for monetary policy based on money growth have been unsuccessful in recent years because the relationship between money growth and inflation has broken down. The Taylor rule is a formula that tells the central bank how much to change interest rates in response to changes in inflation and output. The Taylor rule has been shown to be effective in keeping inflation low and stable.
However, there are some problems that a central bank might encounter in trying to use the Taylor rule. One problem is that the Taylor rule is based on a number of assumptions, and if these assumptions are not met, the Taylor rule may not be effective. Another problem is that the Taylor rule is a blunt instrument, and it may be difficult for the central bank to use the Taylor rule in a way that does not cause too much volatility in the economy.
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In Hart's incomplete contracts model of boundaries of the firm (select the best answer). Select one: a. ex ante investment levels are efficient b. ex ante lump sum transfers can change the efficient allocation of asset ownership c. bargaining power is irrelevant d. ex post trade is efficient
The statement that best represents Hart's incomplete contracts model of boundaries of the firm is: ex ante lump sum transfers can change the efficient allocation of asset ownership.
Oliver Hart, a Nobel laureate in economics, proposed the "incomplete contracts" theory of the firm's boundary. Incomplete contracts refer to contracts that do not specify all contingencies in advance. Hart believes that the firm arises when the market is unable to provide goods or services that require the use of shared assets and investments. Therefore, the firm emerges as a solution to incomplete contracts.Hart defines an incomplete contract as one that does not specify what will happen if a disagreement occurs in the future.
it does not include clauses that would be necessary to account for all possibilities.The absence of an explicit clause specifying how the parties should behave in a particular situation creates a "hold-up" issue. Hart's solution to the hold-up issue is to provide parties with residual control rights over the asset. Residual control rights enable a party to obtain any profits or losses that the asset generates.Incomplete contracts result in a bargaining problem between the parties involved. Parties must work together to resolve disagreements that may arise in the future, and each party must have some bargaining power to reach a mutually beneficial agreement. Ex ante lump sum transfers can affect the efficient allocation of asset ownership. Therefore, the best answer is: ex ante lump sum transfers can change the efficient allocation of asset ownership.
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Which trends in McDonald’s external environment are likely to have the greatest impact on the company’s ability to sustain a competitive advantage?
How is McDonald’s positioned vis-a-vis its major competitors?
What business-level strategy does McDonald’s employ? Is it effective? How so?
Which international strategy does McDonald’s employ? Is it effective? How so?
Trends in McDnald’s external environment that are likely to have the greatest impact on the company’s ability to sustain a competitive advantage.
What does it have?They include the following:
Consumer health consciousness and focus on healthier eating options, competition from other fast-food chains and small, niche restaurants, changes in consumer preferences, and the impact of digitalization on the food service industry.
To remain competitive in the industry, MDonald's has responded to changing consumer preferences by adding healthier options to its menu and introducing new technology, such as self-ordering kiosks, to enhance the customer experience.
MDonald's is well-positioned relative to its major competitors in the fast-food industry, with a strong brand identity, global reach, and an extensive supply chain that can quickly respond to changing customer preferences.
Furthermore, MDonald's has a reputation for providing affordable, high-quality meals to its consumers.
MDonald's employs a cost leadership strategy at the business level, which has enabled it to maintain its position as a market leader in the fast-food industry. This strategy is highly effective because it allows the company to offer low prices while maintaining a high level of quality.
MDonald's employs a transnational strategy in the international market, which involves a balance between global integration and local responsiveness. This strategy has been highly effective because it enables the company to adapt to local market conditions while maintaining a consistent global brand identity.
Additionally, the company has been able to leverage its global supply chain to achieve economies of scale and reduce costs.
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