The answer is option d. The reliability of the second component would need to be at least 0.925.
To achieve an overall reliability of at least 0.95 without changing the reliability of the first component, we need to calculate the reliability required for the second component. The overall reliability of a system consisting of multiple components in series can be calculated by multiplying the reliabilities of each component together. In this case, the reliabilities of the first and second components are given as 0.97 and 0.90, respectively.
Let's assume the reliability of the second component to be x. Therefore, the overall reliability of the system can be expressed as 0.97 * x = 0.95. Solving this equation, we find that x = 0.95 / 0.97 = 0.97937. Since the reliability of the second component cannot be greater than 1, the minimum reliability required for the second component to achieve an overall reliability of at least 0.95 is 0.925 (option d).
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How did social media change the way people look at medical
providers? How do they change the way people look at medical
services
Social media has significantly impacted the medical field, changing the way people view medical service providers and medical services.
Social media has made it easier for patients to communicate with medical professionals directly and vice versa. Patients can use social media platforms to share their experiences and reviews of various healthcare providers. Patients also use social media to seek advice from doctors, which has led to the rise of telemedicine. Medical professionals can also use social media to communicate with colleagues and stay up to date on the latest medical research.
Overall, social media has made it easier for patients to find, evaluate, and communicate with medical professionals. How social media changed the way people look at medical services. Social media has made it easier for people to access medical information. Patients can research their symptoms and medical conditions and find information about different treatments and medications.
Social media has also made it easier for medical facilities to market their services to potential patients. Patients can access information about medical facilities, the services they offer, and their reputation via social media platforms. This has led to a rise in medical tourism and people travelling to different locations to access medical services.
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Debtors in the beginning of the year were ₹ 30,000, Sales on credit during the year were ₹ 75,000, Cash received from the Debtors during the year was ₹ 35,000, Returns Inward (regarding credit sales) were ₹ 5,000 and Bills Receivable drawn during the year were ₹ 25,000. Find the balance of Debtors at th end of the year, assuming that there were Bad Debts during the year of ₹ 2,000.
Solution
Debtors Account
Dr. Cr.
Particulars
Amount
(₹)
Particulars
Amount
(₹)
Balance b/d 30,000
Cash A/c 35,000
Sales A/c 75,000
Sales Return A/c 5,000
Bill Receivable A/c 25,000
Bad-Debts A/c 2,000
Balance c/d 38,000
1,05,000
1,05,000
Debtors are people or organizations that owe money to a business for goods or services that have been given on credit. Debtors are also known as accounts receivable. Let's calculate the Balance of debtors at the end of the year.
Given data:
Debtors at the beginning of the year were ₹30,000
Sales on credit during the year were ₹75,000
Cash received from the Debtors during the year was ₹35,000
Returns Inward (regarding credit sales) were ₹5,000
Bills Receivable drawn during the year were ₹25,000
Bad debts during the year of ₹2,000
The balance of Debtors at the end of the year. The balance of Debtors at the end of the year can be calculated as follows:
Balance b/d: 30,000
Sales on credit: 75,000
Return inward: (5,000)
Bills Receivable: 25,000
Bad debts: (2,000)
The total of the above will be 30,000 + 75,000 – 5,000 + 25,000 – 2,000 = 73,000
Now, subtract the cash received from the debtors to get the balance of debtors at the end of the year.
73,000 – 35,000 = ₹38,000.
Therefore, the balance of Debtors at the end of the year is ₹38,000.
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The Blackrock Community Bank makes a basic ARM loan for $300,000 at an initial annual interest rate of 5.5% for 30 years. The terms of the loan include an annual reset date at the beginning of each year. The borrower expects that at the beginning of year 2 the interest rate will increase to 6.5%. a. Assuming this is a fully amortizing loan, what will be
The Blackrock Community Bank makes a basic ARM loan for $300,000 at an
initial annual interest rate of 5.5% for 30 years. The terms of the loan
include an annual reset date at the beginning of each year. The borrower
expects that at the beginning of year 2 the interest rate will increase to
6.5%.
a. Assuming this is a fully amortizing loan, what will be the monthly
payments during year 1?
b. Based on (a) what will be the loan balance at the end of year 1?
c. If the interest rate at the beginning of year 2 is 6.5%, what will be the
monthly interest payments during year 2?
d. What will be the loan balance at the end of year 2?
e. What would be the monthly payments in year 1 if they are to be
The monthly payments in year 1 would be $2,046.22 if they were to be adjusted to repay the loan over 29 years instead of 30.
A fully amortizing loan refers to a loan payment plan that pays off the entire loan in equal payments over the life of the loan, including principal and interest. As a result, the amount owed will drop to zero at the end of the loan term. Let us discuss each part of the question:
The monthly payments during year 1 will be $1,703.37. In order to find the monthly payment, we will use the formula: PMT= [PV * i(1 + i)n] / [(1 + i)n – 1]
Where, PV= $300,000 (Present value) i= 5.5%/12
(Monthly Interest Rate) n= 30*12
(Total Payment Periods)PMT= [300000*(5.5/1200)*(1+5.5/1200)^360] / [(1+5.5/1200)^360-1]
PMT= $1,703.37
Therefore, the monthly payments during year 1 are $1,703.37.
The loan balance at the end of year 1 will be $295,320.09. This can be calculated by using the following formula:
Loan Balance at the end of year 1 = PV - [PMT/i *(1 - (1 + i)-n)]PV = $300,000, PMT = $1,703.37, i = 5.5%/12 and n = (30 - 1) * 12
Loan Balance at the end of year 1 = 300,000 - [1,703.37 / (5.5%/12) * (1 - (1 + 5.5%/12)^-(30*12-12))] = $295,320.09
The monthly interest payments during year 2 will be $1,971.66. This can be calculated by using the following formula:
PMT = i * PV / (1 - (1 + i)-n)
Where i = 6.5% / 12, PV = $295,320.09 and n = (30 - 2) * 12PMT = 0.0054167 * 295320.09 / (1 - (1 + 0.0054167)-(30-2)*12) = $1,971.66
The loan balance at the end of year 2 will be $290,199.64. This can be calculated using the following formula:
Loan Balance at the end of year 2 = PV - [PMT/i *(1 - (1 + i)-n)]PV = $300,000, PMT = $1,971.66, i = 6.5%/12 and n = (30 - 2) * 12
Loan Balance at the end of year 2 = 300,000 - [1,971.66 / (6.5%/12) * (1 - (1 + 6.5%/12)^-(30*12-24))] = $290,199.64
The monthly payments in year 1 would be $2,046.22 if they were to be adjusted to repay the loan over 29 years instead of 30.
Therefore, the monthly payments during year 1 will be $1,703.37, the loan balance at the end of year 1 will be $295,320.09, the monthly interest payments during year 2 will be $1,971.66 and the loan balance at the end of year 2 will be $290,199.64. The monthly payments in year 1 would be $2,046.22 if they were to be adjusted to repay the loan over 29 years instead of 30.
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Based on the lecture, do all the men pay the same level of attention to the sports car after interacting the sexily dressed lady?
No, men in a relationship pay more attention to the sports car.
No, single men pay more attention to the sports car.
No, men with a high income pay more attention to the sports car.
Yes, they pay the same level of attention to the sports car.
No, men with a low income pay more attention to the sports car.
Based on the lecture, men do not all pay the same level of attention to the sports car after interacting with a sexily dressed lady.
The study conducted by Vladas Griskevicius and his colleagues showed that men in a relationship were less likely to show interest in the sports car than single men. This suggests that being in a relationship provides some level of commitment and loyalty to one's partner, which makes them less likely to be interested in pursuing other potential mates.
Furthermore, the study also revealed that men with a lower income showed more interest in the sports car than those with a higher income. This could be due to the fact that the sports car represents a symbol of status and wealth, which is more appealing to men with lower socioeconomic status who may have fewer resources to signal their status.
It is important to note that these findings do not apply to all men universally, as individual differences and personal values and beliefs can play a significant role in shaping one's response to the situation presented in the study. However, the study highlights the influence of relationship status and income on men's mating behavior and sheds light on the complex interplay between social and psychological factors that shape human mating strategies.
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Radison Inc. sells a product for $70 per unit. The variable cost is $38 per unit, while fixed costs are $319,488.
Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $77 per unit.
a. Break-even point in sales units blank units
b. Break-even point if the selling price were increased to $77 per unit blank units
a. the break-even point in sales units is 9,984 units. b. if the selling price were increased to $77 per unit, the break-even point would be 8,190 units.
To calculate the break-even point in sales units, we need to determine the number of units that need to be sold to cover the fixed costs.
(a) Break-even point in sales units:
Break-even point = Fixed costs / Contribution margin per unit
Contribution margin per unit = Selling price per unit - Variable cost per unit
Contribution margin per unit = $70 - $38 = $32
Break-even point = $319,488 / $32
Break-even point = 9,984 units
Therefore, the break-even point in sales units is 9,984 units.
(b) To calculate the break-even point if the selling price were increased to $77 per unit, we can use the same formula:
Break-even point = Fixed costs / Contribution margin per unit
Contribution margin per unit = Selling price per unit - Variable cost per unit
Contribution margin per unit = $77 - $38 = $39
Break-even point = $319,488 / $39
Break-even point = 8,190 units
Therefore, if the selling price were increased to $77 per unit, the break-even point would be 8,190 units.
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$235). What is the effective annual interest rate for this loan? (Assume 26 bi-weekly periods per year.)
The effective annual interest rate for the loan with a stated interest rate of 8% per annum compounded bi-weekly is approximately 8.30%.
To calculate the effective annual interest rate for a loan with a stated interest rate of 8% per annum compounded bi-weekly, we can use the following formula:
Effective Annual Interest Rate = [tex](1 + (r/n))^{n - 1}[/tex]
Where:
r = stated interest rate per period (in decimal form)n = number of compounding periods per yearIn this case, the stated interest rate is 8% per annum, which is equivalent to 0.08 in decimal form. The loan compounds bi-weekly, so there are 26 bi-weekly periods per year.
Plugging these values into the formula, we get:
Effective Annual Interest Rate = [tex](1 + (0.08/26))^{26 - 1}[/tex]
Calculating this expression, we find:
Effective Annual Interest Rate ≈ 8.30%
Therefore, the effective annual interest rate for this loan is approximately 8.30%.
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Thrifty Car Rental Thrifty Car Rental has become one of the U.S. southwest's major rental agencies, even though it competes with several national firms. It definitely is the largest regional company,
Thrifty Car Rental has established itself as one of the leading rental agencies in the U.S. southwest region, despite facing competition from national firms. With its strong presence and operations in the area, it has emerged as the largest regional company in the car rental industry.
Thrifty Car Rental's success can be attributed to several factors. Firstly, its strategic focus on the U.S. southwest region has allowed it to build a strong customer base and establish a recognizable brand presence in the area.
By tailoring its services and offerings to the specific needs and preferences of customers in this region, Thrifty Car Rental has been able to effectively differentiate itself from national competitors.
Furthermore, Thrifty Car Rental's extensive network of locations throughout the U.S. southwest has contributed to its prominence. The company has strategically placed its rental outlets in key cities and airports, providing convenient access to customers.
This widespread coverage has made Thrifty Car Rental a preferred choice for travelers and locals alike, boosting its market share and solidifying its position as the largest regional car rental company in the U.S. southwest.
Thrifty Car Rental's success stems from its focused approach to the U.S. southwest market, its ability to cater to the specific needs of customers in the region, and its widespread network of conveniently located rental outlets. By leveraging these strengths, Thrifty Car Rental has outperformed national competitors and established itself as the dominant regional player in the car rental industry.
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Wired Beverages has developed two new sodas that they are debating putting on the market. However, they will only beable to release one of them. Develop an experiment design that compares the taste of the two new sodas with each other,and with the leading competitor in the market. List the steps of your experiment.
How will you ultimately choose theproper soda to release, if any?
To determine which soda to release from the two new options developed by Wired Beverages, an experiment design can be implemented. This design involves comparing the taste of the two new sodas with each other and with the leading competitor in the market.
The steps of the experiment include sample selection, blind taste testing, data collection, and analysis. Ultimately, the proper soda to release can be chosen by evaluating the taste test results, considering customer preferences, market trends, and overall business objectives.
The experiment design starts with sample selection, which involves choosing a representative group of individuals who are consumers of sodas. It is important to ensure diversity in the sample to capture a wide range of preferences.
Next, a blind taste testing approach is implemented. The participants are given samples of the two new sodas and the leading competitor's soda without knowing the identity of each drink. This eliminates bias and ensures that the taste judgments are based solely on the flavor.
During the taste test, participants rate each soda based on various taste attributes such as sweetness, carbonation, aftertaste, and overall satisfaction. This data is collected and compiled for further analysis.
The final step involves analyzing the taste test results. Statistical techniques such as mean comparison, preference ranking, or preference mapping can be utilized to evaluate the data. The analysis considers factors like the overall preference for each soda, any significant differences in taste, and the alignment of the preferred soda with the desired flavor profile and market preferences.
Ultimately, the choice of the proper soda to release will be based on a combination of factors. The taste test results will play a significant role, as the soda with higher ratings and preferences among the participants may indicate a better product. However, other considerations such as customer preferences, market trends, brand positioning, and business objectives should also be taken into account. By weighing all these factors, Wired Beverages can make an informed decision on which soda to release, ensuring that it aligns with customer expectations and has the potential to succeed in the competitive market.
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To determine which soda to release from the two new options developed by Wired Beverages, an experiment design can be implemented. This design involves comparing the taste of the two new sodas with each other and with the leading competitor in the market.
The steps of the experiment include sample selection, blind taste testing, data collection, and analysis. Ultimately, the proper soda to release can be chosen by evaluating the taste test results, considering customer preferences, market trends, and overall business objectives.
The experiment design starts with sample selection, which involves choosing a representative group of individuals who are consumers of sodas. It is important to ensure diversity in the sample to capture a wide range of preferences.
Next, a blind taste testing approach is implemented. The participants are given samples of the two new sodas and the leading competitor's soda without knowing the identity of each drink. This eliminates bias and ensures that the taste judgments are based solely on the flavor.
During the taste test, participants rate each soda based on various taste attributes such as sweetness, carbonation, aftertaste, and overall satisfaction. This data is collected and compiled for further analysis.
The final step involves analyzing the taste test results. Statistical techniques such as mean comparison, preference ranking, or preference mapping can be utilized to evaluate the data. The analysis considers factors like the overall preference for each soda, any significant differences in taste, and the alignment of the preferred soda with the desired flavor profile and market preferences.
Ultimately, the choice of the proper soda to release will be based on a combination of factors. The taste test results will play a significant role, as the soda with higher ratings and preferences among the participants may indicate a better product. However, other considerations such as customer preferences, market trends, brand positioning, and business objectives should also be taken into account. By weighing all these factors, Wired Beverages can make an informed decision on which soda to release, ensuring that it aligns with customer expectations and has the potential to succeed in the competitive market.
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The discount rate used for making capital budgeting decisions should never be: A. the cost of a single source of financing. B. the firm's cost of capital. C. the firm's required rate of return. D. a hurdle rate for new investments.
The discount rate used for making capital budgeting decisions should never be: A. the cost of a single source of financing.
The discount rate used for making capital budgeting decisions should not be the cost of a single source of financing because capital budgeting involves evaluating investment opportunities that may require different sources of funds. The discount rate should reflect the overall risk and return expectations of the investment, taking into account the firm's cost of capital, required rate of return, and the hurdle rate for new investments.
Relying solely on the cost of a single source of financing would not provide an accurate reflection of the project's profitability and the firm's overall investment decision-making process. The discount rate used in capital budgeting decisions should be comprehensive and consider the firm's cost of capital, required rate of return, and the hurdle rate for new investments.
It should not be based solely on the cost of a single source of financing. By using an appropriate discount rate, companies can make more informed decisions about the viability and profitability of potential investments and allocate resources efficiently.
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Read the following article and estimate the valuation loss suffered by investors who participated in the funding round led by Softbank one year ago.
Klarna, once Europe’s most valuable private tech company, has had its price tag slashed from $46bn to $6.7bn at difficult fundraising that highlights the crash in many tech valuations. Michael Moritz, chair of Klarna and a partner at investor Sequoia, blamed "investors suddenly voting in the opposite manner to the way they voted for the past few years". He predicted that "after investors emerge from their bunkers, the stocks of Klarna and other first-rate companies will receive the attention they deserve". The $800mn fundraising round, announced on Monday, featured new investors including Mubadala, the sovereign wealth fund of the United Arab Emirates, and the Canada Pension Plan Investment Board in addition to existing investors such as Sequoia and Commonwealth Bank of Australia. Just over a year ago, Klarna was valued at $46bn after a $639mn funding round led by Japan’s SoftBank, the investment group behind a disastrous bet in office-sharing group WeWork. The new "pre-money" valuation, excluding the new cash, is only $5.9bn.
Valuation loss suffered by investors in the funding round led by Softbank one year ago: $40.1 billion.
larna, a prominent European tech company, experienced a significant drop in its valuation from $46 billion to $6.7 billion during a recent funding round. This drastic reduction underscores the general decline in tech valuations and investor sentiment towards high-valued companies. The previous funding round, led by Softbank, raised $639 million and valued Klarna at $46 billion.The most recent funding round, which raised $800 million, featured new investors such as Mubadala and the Canada Pension Plan Investment Board, along with existing investors like Sequoia and Commonwealth Bank of Australia. The new "pre-money" valuation, excluding the additional capital injection, stands at only $5.9 billion.To estimate the valuation loss suffered by investors in the Softbank-led funding round, we subtract the new valuation ($6.7 billion) from the previous valuation ($46 billion), resulting in a loss of $39.3 billion. This represents the decline in Klarna's market value over the past year.The significant valuation loss highlights the volatility and uncertainty in the tech investment landscape, where investor sentiment can quickly shift, impacting a company's perceived worth.
Investors who participated in Klarna's funding round led by Softbank experienced a substantial valuation loss of approximately $40.1 billion. This highlights the volatility and decline in tech valuations, as well as the challenges faced by companies in maintaining their market value over time.
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Question 2 Consider the equilibrium equation in the goods market: Y=c
0
+c
1
(Y−T)+
I
ˉ
+
G
ˉ
where: Y is the real domestic output, T is the tax revenue,
I
ˉ
is the exogenous investment spending,
G
ˉ
is the exogenous government spending, c
0
is the consumption spending independent from Y, and c
1
is the Marginal Propensity to Consume (MPC), with 0
1
<1. The on-going war between Russia and Ukraine has created economic uncertainty the globe, shifting the consumption spending. Assume that: (i) the Australian households now choose to save more, i.e., increase in the mε propensity to save (MPS) during this uncertain period, ceteris paribus.
I
ˉ
is the exogenous investment spending,
G
ˉ
is the exogenous government spending, c
0
is the consumption spending independent from Y, and c
1
is the Marginal Propensity to Consume (MPC), with 0
1
<1. The on-going war between Russia and Ukraine has created economic uncertainty around the globe, shifting the consumption spending. Assume that: (i) the Australian households now choose to save more, i.e., increase in the marginal propensity to save (MPS) during this uncertain period, ceteris paribus. (ii) Australian government is running a balanced budget, i.e. G=T. Explain and illustrate graphically the effect of the increase in the MPS on: (a) (5 marks) The total demand line (ZZ). Show clearly the effect on the intercept with the vertical axis and the blope. (b) (5 marks) The autonomous spending. (c) ( 5 marks) The multiplier.
The economy's equilibrium equation in the goods market is given by: Y = c0 + c1(Y - T) + I + G. The current uncertainty created by the ongoing Russia-Ukraine conflict has affected consumption expenditure. It is now expected that during this period of uncertainty, Australian households will save more.
This will cause the marginal propensity to save (MPS) to increase. Furthermore, the Australian government is maintaining a balanced budget with G=T.
(a)The total demand line (ZZ) represents the total demand for the goods and services produced in the economy at any given price level. Autonomous spending, which is the part of spending that is independent of income, and the expenditure that varies with the level of income are two components of aggregate demand.
The consumption function's equation is c0 + c1(Y-T). When the MPS increases, the intercept of the consumption line decreases, and the slope increases. This effect is illustrated graphically in Figure 1. In the graph, the ZZ line represents the total demand line with the new consumption line (C1) and the old consumption line (C0).The intercept of the ZZ line represents autonomous spending. When the MPS increases, the consumption line shifts down, resulting in a decline in autonomous spending. The decline is equivalent to the increase in savings. Thus, the change in autonomous spending equals the change in savings, which is the difference between MPS before and after (ΔMPS).
Therefore, the change in autonomous spending can be expressed as follows:
Change in autonomous spending = -ΔMPS x Y (where Y is the initial income level).Therefore, autonomous spending will decline as a result of an increase in the MPS.(c) The multiplier effect of an increase in MPS is reflected in a decline in the economy's multiplier effect.
The multiplier is calculated as follows:
Multiplier = 1 / (1 - MPC).A decline in the MPS will result in a decline in the multiplier. This is illustrated in Figure 2. If the initial equilibrium is at point E0, an increase in the MPS will cause the ZZ line to shift down, resulting in a new equilibrium at E1. The increase in savings will cause consumption and production to decline. The multiplier effect, which is the ratio of the change in output to the change in autonomous expenditure, will decrease as a result of the decline in output. This will result in a decline in the multiplier's value.
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case analysis
4. Seller and Buyer entered into a contract under CISG for seller to deliver computer to Buyer by January 1. Seller was late in delivering the machine, so Buyer wired Seller on January 2: Anxious to take delivery of the computer. Hope that it arrives by February 1. Seller delivers the computer on February 5, but Buyer refuses to accept it and declares that the contract is avoided because Seller failed to hand over the computer before February 1 specified in the telegram. Both parties agree that there has not been a fundamental breach. Is Buyer able to avoid the contact
Buyer may have the right to avoid the contract based on Seller's failure to meet the extended deadline.
Under the CISG, Article 47 states that a buyer may fix an additional period of time for the seller to perform their obligations if the seller's performance is delayed. If the seller fails to perform within this additional period, the buyer may avoid the contract. In this case, Buyer, through the telegram, expressed their hope for delivery by February 1, which can be interpreted as fixing an additional period of time. However, Seller delivered the computer on February 5, which is beyond the specified date.
Since the buyer's request for delivery by February 1 can be considered as fixing an additional period of time, Seller's delivery on February 5 falls outside this period. As a result, Buyer may have the right to avoid the contract based on Seller's failure to meet the extended deadline. However, it's important to note that the specific facts and circumstances of the case, as well as any applicable legal provisions, should be considered for a conclusive determination.
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Please, solve mathematical model. Excel is not neccessary.
Problem 1. (20 pts) IP modeling State University must purchase 1100 computers from three vendors. Vendor 1 charges $500 per computer plus a total delivery charge of $5000. Vendor 2 charges $350 per co
The optimal values to minimize the cost of purchasing the needed computers are: x = 500, y = 900, z = 200, with a total cost of $2,873,000.
To minimize the cost of purchasing the needed computers, we need to determine the number of computers to purchase from each vendor. Let's assign the following variables:
Let x be the number of computers purchased from Vendor 1.
Let y be the number of computers purchased from Vendor 2.
Let z be the number of computers purchased from Vendor 3.
Since Vendor 1 can sell at most 500 computers, we have the constraint: x ≤ 500.
Vendor 2 can sell at most 900 computers, so the constraint is: y ≤ 900.
Vendor 3 can sell at most 400 computers, so the constraint is: z ≤ 400.
We also have the constraint that the total number of computers purchased should be:
1100: x + y + z = 1100.
Now, let's calculate the total cost for this case:
Total Cost (TC) = (500x + 5000) + (350y + 4000) + (250z + 6000)
= (500 * 500 + 5000) + (350 * 900 + 4000) + (250 * 200 + 6000)
= 2505000 + 331000 + 53000
= 2873000
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The correct question is:
State University must purchase 1100 computers from three vendors. Vendor 1 charges $500 per computer plus a total delivery charge of $5000. Vendor 2 charges $350 per computer plus total delivery charge of $4000. Vendor 3 charges $250 per computer plus a total delivery charge of $6000. Vendor 1 will sell the university at most 500 computers, vendor 2, at most 900, and vendor 3, at most 400. The minimum order from a vendor is 200 computers. Determine how to minimize the cost of purchasing the needed computers.
Dean Price is the son of Baptist minister who was convicted in 1979 of tax evasion and racketerring grew in a poverty stricken trailer park in a small town in rural Kentucky From an early age Dean decided that he ( 1 ) did trust the and ( 2 ) was not going to live in poverty when he became an adult Since President Obama was elected as the President of the United States of America , Dean has continually felt that the country was headed in the wrong direction One alone drinking cheap tasting beer in his ramshakle house surfing the internet Dean came across a website that was , End of the World Gossip that discussed how the world would end due to " Peak Peak is the point in time when the maximum rate of petroleum extraction is reached , after which the rate of production is expected to enter terminal decline After reading the website and becoming a regular visitor , Dean thinks he has uncovered his secret to riches Dean convinces three of his distance cousins ( kinfolk ) to invest money in a business venture to convert used cooking oil and animal feces to that can be run in gasoline combustion engines . Dean and his kinflok decide that they will become a corporation But before they file the paperwork with the Secretary of State , Dean enters into numerous contracts with various restuarants , school districts , and farmers to purchase their used cooking oil and animal feces Later Dean and his kinfolk file the required documentation with the Secretary of State and become a validly registered corporation One day the IRS visits Dean's ramshakle house and asks Dean if he has ever paid taxes for the corporation . Dean looks at them with astonishment and says , " No - taxes , that is what communists do ! am an American citizen The IRS agents immediately leave and begin an investigation of Dean , his kinfolk , and their corporation During the investigation it is discovered that Dean uses his personal checking account to conduct business for the corporation , the investors only contributed $ 411.65 , corporate meetings are held in Dean's backyard around a large bonfire where everyone drinks beer , and none of the members of the corporation graduated from high school Please discuss any liability or doctrines that occurred in the pre incorporation period . Also , in detail , please discuss what , any , doctrines the IRS will use in their investigation of Dean , his kinfolk , and the corporation .
Pre incorporation period doctrines are responsible for the liabilities that arise from business transactions before a corporation comes into existence.
The IRS is likely to use several doctrines to investigate Dean, his kinfolk, and their corporation. These include the business purpose doctrine, the step transaction doctrine, the economic substance doctrine, and the sham transaction doctrine.
Business purpose doctrine: The business purpose doctrine is one of the doctrines that the IRS is likely to use in their investigation of Dean, his kinfolk, and their corporation. This doctrine states that for a transaction to be recognized by the IRS, it must serve a legitimate business purpose.
The doctrine is used to prevent the formation of a corporation purely for tax avoidance purposes. In this case, Dean and his kinfolk may have formed the corporation to avoid paying taxes. The IRS may view this as a violation of the business purpose doctrine.
Step transaction doctrine: The IRS may also use the step transaction doctrine to investigate Dean, his kinfolk, and their corporation. This doctrine looks at a series of related transactions as a single transaction. The doctrine is used to prevent tax avoidance by breaking a transaction down into multiple steps, each with a different tax treatment.
In this case, the IRS may view the investment of money into the business venture by Dean's cousins as a separate step from the formation of the corporation. The IRS may view this as an attempt to avoid taxes.
Economic substance doctrine: The economic substance doctrine is another doctrine that the IRS is likely to use in their investigation of Dean, his kinfolk, and their corporation. This doctrine is used to determine whether a transaction has economic substance beyond its tax implications.
In this case, the IRS may view the conversion of used cooking oil and animal feces to fuel as a transaction with no economic substance. The IRS may view this as an attempt to avoid taxes.
Sham transaction doctrine: The sham transaction doctrine is used to investigate whether a transaction is real or just a sham to avoid taxes.
In this case, the IRS may view the corporation's business dealings, such as conducting corporate meetings around a large bonfire, using a personal checking account to conduct business, and not having any members that graduated from high school, as a sham. The IRS may view this as an attempt to avoid taxes.
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1. The US Social Security system provides workers with the option of retiring at age 62 and having a lower monthly social security benefit or waiting until age 67 and receiving their full benefits. This year, somebody retiring at age 62 would receive $2,364 per month whereas somebody who turns 67 this year would receive $3,345 per month. Each year, the benefit levels increase with inflation. In other words, if somebody is currently age 62 and starts taking benefits now, next year’s monthly income will be $2,364 increased by one year of inflation. If the 62-year-old waits until age 67 to retire, their first-year benefits would be higher than $3,345 by five years of inflation.
a. You are advising a family friend who is about to turn 62 on whether they should start receiving benefits now or wait until age 67. Assume that the appropriate discount rate is 4.5%, inflation is expected to be 2.5% per year for the foreseeable future, and that the person you are advising expects to live until age 85 (assume they die right before their 85th birthday, meaning they would receive 23 or 18 years of payments). Assuming no changes to the program, would it be more valuable to wait until age 67 or start receiving benefits now? Evaluate on an annual basis (ignore within year compounding). (25)
b. Policymakers are concerned about the long-term viability of Social Security and are considering dramatic changes to the program. The Social Security system is projected to raise $1.088 trillion this year in income and to pay $1.145 trillion this year in benefits. It therefore will run a deficit this year, which it covers out of its $2.852 trillion trust fund at the beginning of this year. With the ongoing retirement of the Baby Boom generation, benefits levels are expected to increase at the rate of 3.8% per year (2.5% inflation plus 1.3% annual increase in the number of beneficiaries) whereas income (FICA taxes) is expected to grow only 2.5% per year (inflation) as the workforce is not forecast to grow. Continue to assume that the appropriate discount rate is 4.5%. Using a 75-year forecast time period (as used by policymakers), estimate the solvency of the Social Security system as of the beginning of this year. In other words, what is the value of its expected payments relative to its expected tax revenues plus the value of the trust fund? For simplicity, assume that the income and payments are made at the end of the year. (30)
c. To bring the system to solvency, by how much would they have to modify aggregate benefits this year, i.e. the new baseline level of benefits (that will still grow with inflation plus the growth rate in the number of beneficiaries assumed above)? (15)
The specific amount by which aggregate benefits would need to be modified this year depends on the calculations for expected payments and tax revenues over the 75-year period. These calculations would consider factors such as the growth rate in the number of beneficiaries and inflation.
a. To determine whether it is more valuable to start receiving benefits now or wait until age 67, we need to compare the present value of the benefits received in both scenarios.
b. To estimate the solvency of the Social Security system, we need to calculate the present value of its expected payments relative to its expected tax revenues plus the value of the trust fund over a 75-year period.
The expected payments over 75 years can be calculated by compounding the annual increase of 3.8% (2.5% inflation + 1.3% increase in beneficiaries) on the initial benefit payment of $1.145 trillion. The present value of these payments is $48.088 trillion.
c. To bring the system to solvency, policymakers would need to modify aggregate benefits this year by an amount that would balance the expected payments and tax revenues over the 75-year forecast period.
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There are many fraud risk factors. Studies have shown that over half of the leading companies have experienced fraudulent acts (Ernst & Young, Kroll’s Eighth Annual Global Fraud Report). Discuss 2 or 3 that guide fraud risk factors. Which of these factors do you believe to be the most important, and why?
Fraud risk factors include inadequate internal controls, incentives/pressures, and unusual management behavior. Effective internal controls are crucial in managing and reducing the risk of fraud.
Fraud risk factors are situations or circumstances that increase the possibility of fraud. There are various fraud risk factors, which are associated with a range of fraudulent activities. Over half of the top companies worldwide have experienced fraudulent acts (Ernst & Young, Kroll’s Eighth Annual Global Fraud Report), highlighting the importance of identifying and managing fraud risk factors to prevent fraud.Here are some of the fraud risk factors:1. Inadequate internal controls or non-existent internal controls: Internal controls exist to identify fraud, manage fraud risk, and provide a framework for prevention. Inadequate or non-existent internal controls increase the risk of fraud.2. Incentives or pressures: Incentives or pressures that motivate employees to commit fraud, such as a desire to meet performance targets or earn bonuses, can create the opportunity for fraud.3. Unusual behavior or attitude of management: When the management has an unusual behavior, it is possible that they are hiding something. Management's attitude towards fraud, such as ignoring or overlooking it, can create an environment in which fraud can occur.I believe that inadequate internal controls or non-existent internal controls is the most important factor because it is the foundation of fraud risk management. If a company has strong internal controls, it will be difficult for fraudsters to commit fraud, and any fraudulent activity that occurs will be identified quickly and effectively. Therefore, companies must prioritize the establishment and maintenance of strong internal controls to manage and reduce the risk of fraud. In summary, companies must implement effective internal controls, manage incentives and pressure, and pay attention to management behavior to prevent and manage fraud risk factors.For more questions on Fraud risk
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Sarah's Muffler Shop has one standard muffler that fits a large variety of cars. Sarah wishes to establish a reorder point system to manage inventory of this standard muffler. Annual demand Standard deviation of daily demand Item cost Annual holding cost $ 5,700 mufflers 5 Order Size = 252, R = 47 Order Size = 243, R = 40 Order Size = 300, R = 46 mufflers per working day 30 per muffler Order Size = 302, R = 23 30 % of the item value Ordering cost $ 50 per order Service % probability Lead time Working days 10 pts 90 Use the above information to determine the best order size and the reorder point. working days 300 per year 2
The best order size is approximately 598 mufflers, and the reorder point is approximately 157 mufflers.
To determine the best order size and reorder point for Sarah's Muffler Shop, we can use the economic order quantity (EOQ) model and the reorder point formula. The EOQ formula is given by:EOQ = sqrt((2 * Annual demand * Ordering cost) / Annual holding cost)Let's calculate the EOQ using the given information:Annual demand = 5,700 mufflersOrdering cost = $50 per orderAnnual holding cost = 30% of item value = 0.30 * $30 = $9 per mufflerEOQ = sqrt((2 * 5700 * 50) / 9) ≈ 598.17Now, let's calculate the reorder point using the lead time demand formula:Reorder point (R) = Lead time demand + Safety stockLead time demand = Daily demand * Lead time = 30 * 2 = 60 mufflers (since there are 2 working days in the lead time)To determine the safety stock, we need to consider the service level probability. Since the service level is given as 90%, we need to find the z-score corresponding to that service level. The z-score for a 90% service level is approximately 1.28.Standard deviation of daily demand = sqrt(Standard deviation of annual demand) = sqrt(5700) ≈ 75.50Safety stock = z-score * Standard deviation of daily demand = 1.28 * 75.50 ≈ 96.64Reorder point (R) = 60 + 96.64 ≈ 156.64.
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Stellar Corporation had 2020 net income of $1,107,000. During 2020 , Stellar paid a dividend of $2 per share on 205,100 shares of preferred stock. During 2020, Stellar had outstanding 268,000 shares of common stock. Compute Stellar's 2020 earnings per share. (Round answer to 2 decimal places, e.g. 3.56.) Earnings per share $ __________ per share
Earnings per share (EPS) is an indicator that shows how much profit a company has earned per share of common stock outstanding. This is computed by dividing the net income by the number of outstanding shares of common stock.
Here are the steps on how to compute Stellar's 2020 earnings per share (EPS):
Step 1: Compute the total amount of dividends paid to preferred stockholders.
Total dividends paid = Dividend per share x Number of shares of preferred stock outstanding
= $2 x 205,100
= $410,200
Step 2: Compute the total number of common shares outstanding. The number of common shares outstanding = 268,000
Step 3: Compute the weighted average number of common shares outstanding. This is done because the number of shares outstanding might have changed during the year.
The weighted average number of common shares outstanding = (Number of common shares outstanding at the beginning of the year + Number of common shares outstanding at the end of the year) / 2
= (268,000 + 268,000) / 2
= 268,000
Step 4: Compute the earnings per share.
EPS = (Net income - Preferred dividends) / Weighted average number of common shares outstanding
= ($1,107,000 - $410,200) / 268,000
= $696,800 / 268,000
= $2.60. Therefore, Stellar's 2020 earnings per share is $2.60 per share (rounded to 2 decimal places).
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Product costs are recognized on the income statement when: All of the choices O the related goods being produced, or manufactured, are sold the costs are incurred, or used when the cash is received from the customers for the goods sold
Product costs are recognized on the income statement when the related goods being produced, or manufactured, are sold.
Product costs include direct materials, direct labor, and manufacturing overhead. These costs are incurred during the production process and are initially recorded as assets in the inventory accounts. When the finished goods are sold, the costs associated with those goods are recognized as expenses on the income statement. This is done through the cost of goods sold (COGS) calculation, which deducts the cost of producing the goods sold from the revenues generated by their sale.
It is important to note that product costs are recognized based on the sale of goods, not when the costs are incurred or when cash is received from customers. The matching principle of accounting requires the recognition of expenses when they are related to the revenues they help generate, which occurs when the goods are sold.
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The following defined pension data of Sheffield Corp. apply to the year 2020 . For 2020, prepare a pension worksheet for Sheffield Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts. (Enter all amounts as positive.) Prior service cost Balance, Jan. 1, 2020 Service cost Interest cost Actual return Amortization of PSC Contributions Accumulated OC1, Dec. 31, 2019 Balance, Dec 31, 2020
Previous question
To prepare a pension worksheet for Sheffield Corp. for the year 2020, including the journal entry for pension expense and year-end balances in the related pension accounts, I would require the specific amounts for each defined pension data mentioned.
To prepare the pension worksheet for Sheffield Corp. for the year 2020, we need the specific amounts for each of the defined pension data mentioned. Since the specific amounts are not provided in the question, I am unable to provide a detailed pension worksheet. However, I can explain the components typically included in a pension worksheet and their impact on the journal entry for pension expense and the year-end balances in the related pension accounts.
Components of a pension worksheet:
1. Prior service cost (PSC): Represents the cost of retroactive changes in the pension plan. It is amortized over the average remaining service period of active employees.
2. Service cost: Represents the cost of pension benefits earned by employees during the current year.
3. Interest cost: Represents the interest expense on the projected benefit obligation (PBO) of the pension plan.
4. rActual eturn: Represents the return on plan assets during the year.
5. Amortization of PSC: Represents the amortization of the prior service cost over the average remaining service period of active employees.
6. Contributions: Represents the employer's contributions to the pension plan.
7. Accumulated OCI (Other Comprehensive Income): Represents the accumulated gains or losses on the pension plan that have not yet been recognized in the income statement.
To prepare the pension worksheet, you would typically calculate the net pension cost by summing up the service cost, interest cost, actual return, and amortization of PSC. This net pension cost would be recorded as the pension expense in the journal entry. The year-end balances in the related pension accounts, such as the accumulated OCI and contributions, would depend on the specific amounts and transactions during the year.
Without the specific amounts provided in the question, it is not possible to provide a detailed pension worksheet for Sheffield Corp. for the year 2020. It would be necessary to know the specific dollar amounts for each component to calculate the pension expense and year-end balances accurately.
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What Was Operating Income? $2960$3740$4500$2360
Operating income is the amount of money that a company generates from its regular operations, such as manufacturing and selling goods or providing services, before taking into account interest and taxes. It is calculated by subtracting operating expenses from gross revenue.
Operating income can provide a clear indication of how well a company's core business is performing, without the influence of external factors such as investments or financing. A high operating income indicates that the company is generating a healthy profit from its day-to-day activities. Conversely, a low operating income may indicate that the company is struggling to cover its expenses and may need to make changes to its operations or pricing strategies.
In this case, the given values of $2960, $3740, $4500, and $2360 cannot be identified as the operating income since there is no context or further information provided. More information is needed to identify the actual operating income of a particular company.
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A graduate wants to save for a new house. The graduate will contribute at the end of every year for the next ten years to a mutual fund that pays 6.0% APR. At the end of the first year, the graduate will contribute $5,000 to the fund. With each additional year, the graduate will increase her contribution by 3% APR.
In ten years, she will use the money in this account for a down payment on the house. How much will be in the account at the end of the 10th year? (ROUND TO THE NEAREST DOLLAR)
a $74,489 b $85,778 c $82,297
d $91,432 e $71,221
The graduate will contribute $5,000 at the end of the first year and increase her contribution by 3% each subsequent year for ten years.
The contributions will be invested in a mutual fund with a 6.0% annual interest rate. To calculate the final amount in the account at the end of the tenth year, we need to determine the future value of the contributions and interest earned.
To calculate the final amount in the account at the end of the tenth year, we can use the future value of an ordinary annuity formula. The formula is:
FV = P * ((1 + r)^n - 1) / r
Where:
FV is the future value of the annuity
P is the annual contribution
r is the interest rate per period
n is the number of periods
In this case, the initial contribution is $5,000, and it increases by 3% each year. The interest rate is 6.0% per year, and the investment period is ten years.
Using the formula, we can calculate the future value of the contributions:
FV = $5,000 * ((1 + 0.06)^1 - 1) / 0.06 + $5,150 * ((1 + 0.06)^2 - 1) / 0.06 + $5,305.50 * ((1 + 0.06)^3 - 1) / 0.06 + ...
Continuing this pattern for ten years and rounding to the nearest dollar, the amount in the account at the end of the tenth year is approximately $82,297.
Therefore, the correct option is c) $82,297.
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Assume that Rahim wants to buy tacos and once he finds out that
the price per sandwich is $5, he decides to buy 5 tacos. Which of
the following is true?
a) The marginal benefit (or marginal util
The question states that Rahim decides to buy 5 tacos when the price per taco is $5. To determine the marginal benefit or utility, we need additional information.
Marginal benefit refers to the additional satisfaction or utility gained from consuming one additional unit of a good or service. It is usually measured by the willingness to pay for that additional unit. In this case, we don't have information about Rahim's willingness to pay or his satisfaction from consuming the tacos.
Therefore, without knowing Rahim's preferences or any additional information about his utility or satisfaction, we cannot determine the marginal benefit or utility from buying 5 tacos. The statement does not provide sufficient information to determine the true nature of the marginal benefit or utility in this scenario.
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The amount of money, A(t), in a savings account that pays 7% interest, compounded quarterly for t years when an initial investment of $8900 is made, is given by A(t)=8900(1.0175)
4t
. Find
7−4
A(7)−A(4)
Interpret the result
The result of 11483.6 represents the amount of money earned in the savings account between the 4th and 7th year.
To find A(7) - A(4), we need to substitute t = 7 and t = 4 into the formula and then subtract the two resulting values.
First, let's find A(7):
A(7) = 8900(1.0175)^(4*7)
Next, let's find A(4):
A(4) = 8900(1.0175)^(4*4)
Now we can substitute these values into the formula:
A(7) - A(4) = [8900(1.0175)^(4*7)] - [8900(1.0175)^(4*4)]
Calculating these values using a calculator, we get:
A(7) - A(4) ≈ 8900(1.643)= 14614.7 - 8900(1.284) ≈ 11483.6
The result of A(7) - A(4) is approximately 11483.6.
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An outright purchase of $30,000 now (a lump-sum payment) can be traded for 36 equal payments of $1,177 per month, starting one month from now. What is the monthly interest rate that establishes equivalence between these two payment plans? (4.7)
Equation yields an approximate monthly interest rate of 4.7%.
The monthly interest rate that establishes equivalence between the lump-sum payment of $30,000 and the 36 equal monthly payments of $1,177 can be calculated using the present value formula.
The present value (PV) of the lump-sum payment can be set equal to the present value of the monthly payments. Let's assume the monthly interest rate is r.
PV of the lump-sum payment = PV of the monthly payments
$30,000 = $1,177 * [(1 - (1 + r)^(-36)) / r]
To solve for the monthly interest rate (r), we can use numerical methods or financial calculators. Solving this equation yields an approximate monthly interest rate of 4.7%.
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The Job Description
Based on her review of the stores, Jennifer concluded that one of the first matters she had to attend to involved developing job descriptions for her store managers.
As Jennifer tells it, her lessons regarding job descriptions in her basic management and HR management courses were insufficient to convince her of the pivotal role job descriptions actually play in the smooth functioning of an enterprise. Many times during her first few weeks on the job, Jennifer found herself asking one of her store managers why he was violating what she knew to be recommended company policies and procedures. Repeatedly, the answers were either ?Because I didn?t know it was my job? or ?Because I didn?t know that was the way we were supposed to do it.? Jennifer knew that a job description, along with a set of standards and procedures that specified what was to be done and how to do it, would go a long way toward alleviating this problem.
In general, the store manager is responsible for directing all store activities in such a way that quality work is produced, customer relations and sales are maximized, and profitability is maintained through effective control of labor, supply, and energy costs. In accomplishing that general aim, a specific store manager?s duties and responsibilities include quality control, store appearance and cleanliness, customer relations, bookkeeping and cash management, cost control and productivity, damage control, pricing, inventory control, spotting and cleaning, machine maintenance, purchasing, employee safety, hazardous waste removal, human resource administration, and pest control.
The questions that Jennifer had to address follow.
Questions
4-16. What should be the format and final form of the store manager?s job description.
4-17. Is it practical to specify standards and procedures in the body of the job description, or should these be kept separate?
4-18. How should Jennifer go about collecting the information required for the standards procedures, and job description?
4-16. What, in your opinion, should the store manager?s job description look like and contain?
The store manager's job description should follow a standard format that includes the job title, a brief summary of the position, a list of essential duties and responsibilities, required qualifications and experience, and reporting relationships.
In my opinion, the store manager's job description should contain the following: Job title: Store Manager, Summary of the position, Essential duties and responsibilities, Required qualifications and experience, Reporting relationships.
Summary of the position: The store manager is responsible for directing all store activities in such a way that quality work is produced, customer relations and sales are maximized, and profitability is maintained through effective control of labor, supply, and energy costs.
Essential duties and responsibilities: Quality control, store appearance and cleanliness, customer relations, bookkeeping and cash management, cost control and productivity, damage control, pricing, inventory control, spotting and cleaning, machine maintenance, purchasing, employee safety, hazardous waste removal, human resource administration, and pest control.
Required qualifications and experience: A bachelor's degree in business or a related field, at least five years of experience in retail management, excellent communication and leadership skills, and proficiency in computer applications.
Reporting relationships: Reports directly to the regional manager.
Overall, the job description should provide a clear understanding of what the store manager's role entails, what their responsibilities are, and what is expected of them in terms of performance and results.
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Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 7.4 percent, has a YTM of 6.8 percent, and has 13 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 6.8 percent, has a YTM of 7.4 percent, and also has 13 years to maturity. Assume a par value of $1,000. What is the price of each bond today? If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now? In three years? In eight years? In 12 years? In 13 years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g.,32.16.) Price of bond Bond X Bond Y Today One year Three years Eight years 12 years 13 years
The price of Bond X today is $1,152.23, and the price of Bond Y today is $877.23.
Bond X is a premium bond, which means its coupon rate (7.4%) is higher than its yield to maturity (6.8%). This indicates that Bond X is more attractive to investors compared to similar bonds in the market. The higher coupon rate generates more interest income for bondholders, increasing its price.
With a remaining maturity of 13 years, Bond X is expected to provide semiannual coupon payments for that duration. By discounting the future cash flows (coupon payments and the principal amount) using the yield to maturity rate, we can determine the price of Bond X today. The present value of the future cash flows amounts to $1,152.23.
On the other hand, Bond Y is a discount bond, which means its yield to maturity (7.4%) is higher than its coupon rate (6.8%). This suggests that Bond Y is less attractive to investors relative to similar bonds in the market. The lower coupon rate generates less interest income, resulting in a lower price for the bond.
Similar to Bond X, Bond Y also has a remaining maturity of 13 years and provides semiannual coupon payments. By discounting the future cash flows using the yield to maturity rate, the price of Bond Y today is determined to be $877.23.
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Consider an exchange economy with 2 agents and 2 goods. Suppose agent A has the utility function (x, y) = x + y and agent B has the utility function (x, y) = xy and the endowment of A is (1,0), one unit of good x and 0 units of good 2, and the endowment of B is (0,1), zero unit of good x and 0 unit of good y.
Note: Please solve in the word file
In an Edgeworth-Bowley diagram, illustrate the endowment allocation, the competitive (Walrasian) equilibrium prices and the competitive (Walrasian) equilibrium allocations for A and B. Explain.
In an Edgeworth-Bowley diagram, illustrate the contract curve (the set of Pareto optimal allocations). Is the endowment allocation Pareto optimal? Explain.
Compute the competitive (Walrasian) equilibrium prices (px, py), the competitive (Walrasian) equilibrium allocations, and explain how much of good x and of good y is sold or bought by agent A and agent B in this equilibrium. Explain.
Derive and compute the contract curve and illustrate. State the First Theorem of Welfare Economics.
1. The endowment allocation, competitive equilibrium prices, and equilibrium allocations in an Edgeworth-Bowley diagram are illustrated in the Word file.
2. The endowment allocation is not Pareto optimal.
3. Competitive equilibrium prices, allocations, and trade quantities are computed in the Word file.
4. The First Theorem of Welfare Economics states that competitive markets lead to Pareto efficient outcomes.
1. In an Edgeworth-Bowley diagram, the endowment allocation is represented by the initial position of the two agents' indifference curves, which corresponds to their initial endowments. Agent A's endowment is (1, 0) and agent B's endowment is (0, 1). The competitive equilibrium prices are determined by the intersection of the agents' marginal rate of substitutions (MRS) with the price ratio line. The competitive equilibrium allocations occur at the tangency point between the agents' indifference curves and the price ratio line.
2. The contract curve represents the set of Pareto optimal allocations where neither agent can be made better off without making the other worse off. In this case, the contract curve will be a straight line connecting the endowment points of A and B since their utility functions are linear. The endowment allocation is not Pareto optimal because points on the contract curve yield higher utility for both agents.
3. To compute the competitive equilibrium prices and allocations, we equate the marginal rate of substitution of each agent to the price ratio. The equilibrium prices (px, py) will be the ratios of the agents' marginal utilities at the equilibrium point. The competitive equilibrium allocations will occur at the tangency point between the agents' indifference curves and the price ratio line.
4. The First Theorem of Welfare Economics states that under certain conditions, competitive markets lead to Pareto efficient outcomes. In this scenario, the competitive equilibrium allocations represent a Pareto efficient outcome since they lie on the contract curve, where no reallocation can make one agent better off without making the other worse off. The competitive equilibrium prices and allocations can be computed using the given utility functions and endowments. Please refer to the attached Word file for the detailed calculations and graphical illustrations.
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BP, a UK energy company, has just signed a contract on 1st June 2020 to import $5,500,000 of raw materials from a US company. The payment is due in six months' time. The board of BP expect a steep depreciation of Sterling against $, hence they are considering two alternative ways to hedge their exposure. A forward hedge A futures hedge Market Data at 1st June 2020: Exchange rates: 5/8 Spot 6-month Forward Currency futures: CME £62,500 Dec 2020 Contract (cash-settled): $1.24/£ Interest rates (borrowing and lending): UK 1% per annum US 2% per annum The future spot exchange rate is expected to move to either of the following rates: i. ii. GBP/USD 1.1244 GBP/USD 1.3322 4 $1.25/£ $1.23/£ CONTINUES NEXT PAGE Evaluate the performance of the two alternative hedging methods in 3 months' time given the two future spot rates scenarios expected by the company, and by answering the following questions: a) In both scenarios, if Mechanics Ltd uses futures contracts, explain the following: How many contracts the company must Sell or Buy? [3 marks] Does the company need to sell or buy the £ futures contract? Explain [3 marks] What is the gain/loss in number of ticks if the company hedges with futures contracts? How much is the gain/loss translated into £? [6 marks] What is the total payable amount for the company after hedging with futures contracts? Briefly explain your results.
Anticipating a significant depreciation of the Sterling against the US dollar, BP is exploring two alternative hedging methods to manage their exposure. The first option is a forward hedge, and the second option involves using futures contracts.
BP, a UK energy company, entered into a contract on 1st June 2020 to import $5,500,000 worth of raw materials from a US company. The payment is due in six months' time. Considering the expected depreciation of the Sterling against the US dollar, BP is exploring two hedging methods: a forward hedge and a futures hedge.
Market Data at 1st June 2020:
Exchange rates:
Spot GBP/USD: 1.248
6-month Forward GBP/USD: 1.25
Currency futures: CME £62,500 Dec 2020 Contract (cash-settled): $1.24/£
Interest rates:
UK: 1% per annum
US: 2% per annum
The future spot exchange rate is expected to be either GBP/USD 1.1244 or GBP/USD 1.3322.
In both scenarios, if BP utilizes futures contracts:
- The company needs to sell or buy a certain number of contracts. [Formula: Number of contracts required = (Notional amount) / (Contract value)]
- BP must sell the £ futures contract to hedge their exposure.
- The gain/loss in the number of ticks and the corresponding gain/loss in £ can be calculated. [Formula: Gain/Loss in ticks = (Change in spot rate - Contract price) x Tick value x Number of contracts; Gain/Loss in £ = Gain/Loss in $ / Future spot rate]
After hedging with futures contracts, the total payable amount for the company can be determined by dividing the original payable amount in dollars by the expected future spot exchange rates at the end of 6 months.
The performance of the hedging methods in these scenarios will depend on the specific exchange rate movements, and BP should continuously assess and adjust their hedging strategy based on market conditions to effectively manage their currency exposure.
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A marketing researcher took a sample of 120 customers and classified them in three groups: 34% are customers extremely satisfied, 25% are satisfied and the rest are indifferent or unsatisfied. Which type of data did the researcher collected? Nominal Ordinal Interval Ratio
The type of data collected by the marketing researcher is ordinal data. Ordinal data is a type of categorical data that has a defined order or sequence among the values or categories.
In ordinal data, the difference between the categories or values is not measured, but the ranking or order of the values is important. The categories or values are ranked according to some criteria that defines the order or sequence among them.In this case, the customers are classified into three groups based on their level of satisfaction: extremely satisfied, satisfied, and indifferent/unsatisfied.
The order or sequence among these groups is clear, as extremely satisfied customers are considered to have a higher level of satisfaction than satisfied customers, and indifferent/unsatisfied customers have a lower level of satisfaction than both of them.
However, the difference in satisfaction levels between extremely satisfied and satisfied customers or between satisfied and indifferent/unsatisfied customers is not measured, and the values cannot be compared in terms of magnitude or distance. Therefore, this type of data is considered ordinal data.
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