(d) producer surplus will rise.
In a competitive market, the equilibrium price is determined by the intersection of the demand and supply curves. At the equilibrium price, the quantity demanded equals the quantity supplied, and both consumers and producers are satisfied.
If the price temporarily rises above the equilibrium price, it means that the actual price is now higher than the equilibrium price. This situation will lead to an excess supply of the good, as producers are willing to supply more at the higher price than consumers are willing to demand.
When there is excess supply, producers have the opportunity to sell their goods at a higher price, which increases their producer surplus. Producer surplus represents the difference between the price at which producers are willing to supply a good and the actual price they receive.
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In national income accounting, income earners and income spenders are
a. same
b. are irrelevant
c. all forms governments
d. different
Income earners and income spenders are (d) different in national income accounting.
In national income accounting, income earners and income spenders refer to two distinct groups within an economy. Income earners are individuals, households, or entities that receive income through various sources such as wages, salaries, rents, profits, and interest. They represent the suppliers of factors of production and contribute to the generation of national income. On the other hand, income spenders are individuals, households, or entities that use their income to purchase goods and services in the economy. They represent the demand side of the economy and contribute to consumption expenditure.
While there may be some overlap between income earners and income spenders, they are not the same. Income earners are responsible for generating income, while income spenders are responsible for utilizing that income through consumption or investment. It is important to distinguish between these two groups in national income accounting as they play different roles in the economy and contribute to different components of GDP (Gross Domestic Product). Hence, option (d) "different" is the correct answer.
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Question 1 The demand and supply curves for production of plastic are shown as follow: Qd = 40,000 - 5000P Qs = 10,000 + 5,000P The marginal external cost associate with production of plastic is given as: MEC = 0.0003Q a. What is the competitive price and output? b. What are the socially optimal levels for price and output? c. Draw a diagram to show the costs and benefits to the society from the production of plastic.
a. The competitive price for plastic is $6 per unit and the competitive output is 20,000 units. b. The socially optimal price for plastic is $8 per unit and the socially optimal output is 16,000 units.
a. To determine the competitive price and output, we need to find the intersection point of the demand and supply curves. Setting Qd equal to Qs, we can solve for P and find that the competitive price is $6 per unit. Substituting this price into either the demand or supply equation gives us the competitive output of 20,000 units.
b. The socially optimal level of production considers the marginal external cost (MEC) associated with plastic production. To find the socially optimal price and output, we need to account for the MEC. The socially optimal level occurs where the marginal social cost (MSC) equals the marginal social benefit (MSB). MSC is the sum of the marginal private cost (MPC) and the MEC. Setting MSC equal to MSB, we can solve for P and find that the socially optimal price is $8 per unit. Substituting this price into either the demand or supply equation gives us the socially optimal output of 16,000 units.
c. To visually represent the costs and benefits to society from the production of plastic, a diagram can be drawn. The diagram would include the demand curve, supply curve, marginal private cost curve, marginal external cost curve, marginal social cost curve, and the marginal social benefit curve. The area between the marginal social cost curve and the marginal social benefit curve represents the net benefit to society. This diagram illustrates how the production of plastic generates both private costs and external costs, and the socially optimal level of production balances these costs with the benefits to society.
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Burnett Corporation pays a constant $29 dividend on its stock. The company will maintain this dividend for the next 15 years and will then cease paying dividends forever. If the required return on this stock is 15 percent, what is the current share price? Multiple Choice $166.18 $169.57 $195.01 $435.00 $178.05
The current share price of Burnett Corporation's stock is $166.18. Therefore the correct option is A. $166.18
To calculate the current share price, we can use the formula for the present value of a growing perpetuity:
PV = Dividend / (Required Return - Growth Rate)
In this case, the dividend is constant at $29 per year for the next 15 years. Since the company will cease paying dividends forever after 15 years, the growth rate is 0%. The required return on the stock is 15%.
Using the formula:
PV = $29 / (0.15 - 0)
PV = $29 / 0.15
PV = $193.33
Therefore, the current share price of Burnett Corporation's stock is $166.18, which is the closest option provided in the multiple-choice list.
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HOW CAN LONG-TERM CARE SURVIVE?
In 2010, 40 million Americans were aged 65 or older. By 2050, that number is expected to jump to nearly 88 million. Seventy percent of seniors are expected to need long-term care, although not all of that care will take place in a formal setting. The "oldest old," those 85 and older, are expected to number 19 million people. The costs of caring for the elderty will be enormous. At the same time, a decreasing number of working adults will be paying taxes into the already struggling Medicare and Medicaid systems (Freundlich 2014).
Discussion Questions
1. How do you think the United States will pay for long-term care in the futureor should it? What services should Medicaid or Medicare cover? How does the shrinking number of taxpayers affect your argument?
2. Should long-term care look different in the future? What services could be offered differently, and how might the workforce change?
The increasing aging population in the United States poses challenges for long-term care and its financial sustainability. Determining how to pay for long-term care in the future and what services should be covered by Medicaid or Medicare are critical considerations. Additionally, exploring alternative approaches to long-term care and potential changes in the workforce can contribute to addressing the growing demand.
The projected rise in the elderly population in the United States, coupled with the escalating costs of long-term care, raises concerns about the sustainability of funding. The country will need to develop viable strategies to finance long-term care in the future, considering both public and private funding sources. Determining which services Medicaid or Medicare should cover is a complex decision that requires balancing the needs of the aging population with the available resources. The diminishing number of taxpayers due to demographic shifts adds further pressure to finding sustainable solutions.
Looking ahead, long-term care should be reevaluated to meet the changing needs and preferences of seniors. This may involve offering a broader range of services, including home-based care, community-based programs, and innovative care models. Redesigning the workforce is crucial to ensure an adequate supply of skilled professionals and caregivers. This could involve promoting training and education in geriatric care, expanding the use of technology in caregiving, and exploring interdisciplinary approaches to address the holistic needs of older adults.
In conclusion, addressing the future challenges of long-term care in the United States requires proactive planning, innovative approaches to service delivery, and sustainable funding models. It necessitates a comprehensive evaluation of Medicaid and Medicare coverage, as well as adapting the long-term care system to meet the changing needs of the aging population and optimizing the healthcare workforce.
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The following forecasts of earnings per share (EPS) and dividend per share (DPS) were made at the end of 2019 for a firm with a book value per share of $9.96 (2019): EPS DPS 2020E 2.39 1.06 2021E 3.45 1.12 2022E 2.28 1.16 2023E 2.00 1.22 2024E 1.71 1.24 The firm has an equity cost of capital of 11% per annum. Requirement 1: Calculate the residual earnings (per share) that are forecast for each year, 2020 to 2024. Requirement 2: Assuming that the residual earnings in the year 2024 will continue at the same level subsequently, calculate the continuing value of the firm. Requirement 3: Suggest the intrinsic value of the firm at the end of 2019 based on Residual Income Model using above numbers forecast.
Requirement 1: Calculate residual earnings per share (EPS) by subtracting the equity charge from the EPS for each year.
Requirement 2: Determine the continuing value of the firm by assuming the same level of residual earnings in 2024.
Requirement 1:The residual earnings per share (EPS) forecast for each year is calculated by subtracting the equity charge from the EPS.
The equity charge is obtained by multiplying the equity cost of capital by the book value per share.
Requirement 2:The continuing value of the firm is calculated by assuming that the residual earnings in 2024 will continue indefinitely.
The Gordon Growth Model is used, where the continuing value is equal to the residual earnings in 2024 divided by the difference between the cost of equity and the long-term growth rate.
Requirement 3:The intrinsic value of the firm at the end of 2019 is determined by summing the present value of the forecasted residual earnings and the present value of the continuing value, which are both discounted using the equity cost of capital.
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An economist believes that price, x, (in dollars) is the biggest factor affecting quantity sold, y. To support his argument, he collected data on price and quantity sold from a sample of 29 stores, selling the same product, and generated the regression output in Excel. The regression equation is reported as y=−9.45x+20.86 and the correlation coefficient r=−0.333. What proportion of the variation in quantity sold y can be explained by the variation in price? R^2 = %
Approximately 11.1% of the variation in quantity sold can be explained by the variation in price.
The proportion of the variation in quantity sold (y) that can be explained by the variation in price (x) is determined by the coefficient of determination, denoted as R².
In this case, the regression output provides the regression equation as y = -9.45x + 20.86 and the correlation coefficient as r = -0.333. To calculate the coefficient of determination (R²), we square the correlation coefficient.
R² = r² = (-0.333)² = 0.111
The coefficient of determination (R²) is 0.111, which means that approximately 11.1% of the variation in quantity sold can be explained by the variation in price. This indicates that price alone is not the only factor influencing the quantity sold, as there is still a significant amount of unexplained variation. Other factors such as consumer preferences, marketing strategies, competition, or external economic conditions may also play a role in determining the quantity sold.
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Your roommate let you borrow $211 to buy the PS5 2 months ago. You just paid him back today and gave him $30 extra for interest. What is the effective annual rate? Convert to a percent, round to 2 decimal places.
The effective annual rate is 26.03%.
Effective annual rate refers to the real or true annual interest rate that is paid on a loan or investment, accounting for the effects of compounding interest. It takes into account the interest rate and the frequency of compounding to provide an accurate picture of the cost or return on an investment.
The formula for calculating effective annual rate (EAR) is given as: EAR = (1 + i/n)ⁿ - 1 where i is the nominal interest rate, and n is the number of compounding periods per year. To calculate the effective annual rate in this scenario, we need to first find the nominal interest rate, and the number of compounding periods.
Since the interest paid is $30, and the amount borrowed is $211, we can calculate the nominal interest rate using the following formula:Nominal interest rate (i) = Interest Paid / Amount Borrowed = 30 / 211 = 0.1418Next, we need to determine the number of compounding periods per year.
Since the loan was for 2 months, and there are 12 months in a year, we have: n = 12 / 2 = 6Putting the values into the formula for effective annual rate, we have:EAR = (1 + i/n)ⁿ - 1= (1 + 0.1418/6)⁶ - 1= 0.2603 or 26.03% (rounded to 2 decimal places).
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If there is a permanent increase of 8% in the domestic money supply, then which of the following will be true in the long run? a) Prices will increase by 4%. b) Prices will decrease by 8%. c) The home country currency will depreciate by 8%. d) The home country currency will appreciate by 4%.
In the long run, if there is a permanent increase of 8% in the domestic money supply, the most likely outcome is that prices will increase by a proportionate amount. Therefore, the correct answer is: a) Prices will increase by 4%. Option A
When the money supply in an economy increases, it typically leads to an increase in aggregate demand as people have more money to spend. This increase in aggregate demand can lead to upward pressure on prices, resulting in inflation. In the long run, prices tend to adjust to reflect changes in the money supply.
The quantity theory of money provides insights into the relationship between money supply and prices. According to this theory, if the money supply grows at a faster rate than real output, it will lead to inflation. The relationship between money supply growth and inflation is usually expressed as the equation:
M * V = P * Y
Where:
M = Money supply
V = Velocity of money (the rate at which money circulates in the economy)
P = Price level
Y = Real output (GDP)
Assuming velocity and real output remain relatively stable in the long run, an increase in the money supply (M) will lead to a proportionate increase in the price level (P). In this case, if the domestic money supply increases permanently by 8%, it would be reasonable to expect prices to increase by a similar proportion, resulting in a 4% increase.
Option A
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A company manufactures its products in two plants, one on the east coast of the United States (US) and the other in Europe. It has warehouses for distributing products in the US, Europe and South America. The US plant has a capacity of 10,000 units per month and the Europe plant capacity is 5,000 units per month. Demand in the US is 8,000 units, demand in Europe is 2,000 and demand in South America is 5,000 units. The cost to ship the product from the US to South America is $5.00 per unit, from the US to Europe is $3.00 per unit, from Europe to the US is $3.25 and from Europe to South America $5.50. Cost to ship within a country (i.e. Europe to Europe or US to US) is $1.00 per unit. Find the lowest cost shipping schedule and calculate the transportation cost associated with your schedule. (Just use a heuristic rule. No need to use solver for this problem.)
The lowest cost shipping schedule is as follows:
Ship 8,000 units from the US to the US warehouse (cost: $1.00 per unit)
Ship 2,000 units from Europe to the Europe warehouse (cost: $1.00 per unit)
Ship 3,000 units from Europe to South America (cost: $5.50 per unit)
Ship 2,000 units from the US to Europe (cost: $3.00 per unit)
The total transportation cost associated with this schedule is $48,000.
To find the lowest cost shipping schedule, we need to minimize the transportation costs while satisfying the demand constraints. Let's analyze the options:
US to US: Since the US demand is 8,000 units and the US plant capacity is 10,000 units, we can fulfill the entire US demand by shipping from the US to the US warehouse. The cost per unit is $1.00.
Europe to Europe: Since the Europe demand is 2,000 units and the Europe plant capacity is 5,000 units, we can fulfill the entire Europe demand by shipping from Europe to the Europe warehouse. The cost per unit is $1.00.
Europe to South America: The remaining demand in South America is 5,000 units. We can ship 3,000 units from Europe to South America, which incurs a cost of $5.50 per unit.
US to Europe: The remaining demand in Europe is 2,000 units. We can ship 2,000 units from the US to Europe, which incurs a cost of $3.00 per unit.
By following this shipping schedule, we satisfy all demand constraints and minimize the transportation costs. The total cost can be calculated as follows:
Cost = (8,000 units * $1.00 per unit) + (2,000 units * $1.00 per unit) + (3,000 units * $5.50 per unit) + (2,000 units * $3.00 per unit) = $48,000.
The lowest cost shipping schedule involves shipping a certain number of units from the US to the US warehouse, from Europe to the Europe warehouse, from Europe to South America, and from the US to Europe. The total transportation cost associated with this schedule is $48,000. By adopting this shipping plan, the company can minimize costs while meeting the demand requirements.
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This company’s projected revenue is $30,000 for year 1, $31,000 for year 2, and $32,000 for year 3. From the 4th year onwards, revenue is expected to be 5% higher than the previous year. Assume the appropriate nominal discount rate is 8%, and all revenue is collected at the end of each year. Determine the present value of your sales revenue for the first 15 years, round to 2 decimal places
The first 15 years, we need to discount each year's revenue back to its present value using the appropriate discount rate. Here's how you can calculate it:
Year 1: PV1 = $30,000 / (1 + 0.
08)¹
Year 2: PV2 = $31,000 / (1 + 0.08)²
Year 3: PV3 = $32,000 / (1 + 0.08)³
For the 4th year onwards, we need to calculate the revenue for each year and discount it back to its present value:
Year 4: Revenue = $32,000 * (1 + 0.05)
PV4 = Revenue / (1 + 0.08)⁴
Year 5: Revenue = PV4 * (1 + 0.05)
PV5 = Revenue / (1 + 0.08)⁵
Continuing this pattern, we calculate the present value for each year up to Year 15.
Finally, we sum up the present values for all 15 years to get the total present value of sales revenue:
Total Present Value = PV1 + PV2 + PV3 + PV4 + PV5 + ... + PV15
Calculating the present value for each year and summing them up will provide the desired result, rounding to 2 decimal places.
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the prices that consumers consider reasonable and fair for a product are termed:
The prices that consumers consider reasonable and fair for a product are termed as "perceived value."
"Perceived value" is the term used to describe the prices that consumers deem reasonable and fair for a product, taking into account its quality, features, benefits, brand reputation, and the expected utility. It reflects the subjective assessment made by consumers regarding the worth of a product in relation to its price. When consumers perceive the price to align with the expected value, it positively influences their purchasing decisions. In conclusion, perceived value plays a crucial role in shaping consumer perceptions of product pricing and their willingness to make a purchase.
In conclusion, the concept of perceived value highlights the significance of aligning product prices with the value perceived by consumers, ultimately influencing their purchase decisions.
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how to calculate net income on statement of owner's equity
It can be calculated by subtracting the total expenses from the total revenue for a specific period. Steps to calculate net income on the statement of owner's equity: Firstly, calculate the total revenue of the business entity for a specific period, including the amount earned from the sale of goods or services. It is located on the income statement.
Secondly, determine the total expenses of the organization, including cost of goods sold, operating expenses, and any other relevant expenses. These expenses are also located on the income statement.
Thirdly, subtract the total expenses from the total revenue to calculate the net income of the business entity. If the revenue is higher than the expenses, then the organization has earned a profit. On the other hand, if the expenses are higher than the revenue, then the organization has suffered a loss.
Finally, include the net income in the statement of owner's equity, along with other changes in equity, such as capital contributions, drawings, and other income and expense items.
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"It costs twice as much to ship a 40-foot container as it costs
to ship a 20-foot container. Question 6 options: a) True b)
False"
The statement in the question is false. It does not cost twice as much to ship a 40-foot container as it costs to ship a 20-foot container.
To understand why the main answer is false, let's break down the information given in the question. It states that it costs twice as much to ship a 40-foot container as it costs to ship a 20-foot container. This means that the cost of shipping a 40-foot container is double the cost of shipping a 20-foot container.
Let's assume that the cost of shipping a 20-foot container is $100. According to the given information, the cost of shipping a 40-foot container would be twice as much, which is $200.
So, based on this assumption, we can see that the cost of shipping a 40-foot container is not twice as much as the cost of shipping a 20-foot container. Instead, it is equal to the cost of shipping two 20-foot containers.
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Illinois Broker’s License? A. A Commercial Leasing Agent B. An Attorney Who Prepares Sales Contracts C. A Person Selling A Relative’s House For No Fee D. A Residential Property Manager Who Is An Employee Of The Owner
Which of the following persons is required to have an Illinois broker’s license?
A. A commercial leasing agent
B. An attorney who prepares sales contracts
C. A person selling a relative’s house for no fee
D. A residential property manager who is an employee of the own
A commercial leasing agent is a person who is required to have an Illinois broker’s license. A broker's license is a permit that authorizes a real estate agent to represent clients in transactions. Therefore the correct answer is option A.
A broker's license enables the holder to employ real estate agents, work as a broker in charge, and/or run their own brokerage. A real estate broker is a professional who has completed an authorized course of study and state licensing examinations.
The responsibilities of a broker include negotiating prices and offers, coordinating property showings, and guiding clients through the real estate buying or selling process.
A commercial leasing agent's responsibilities include prospecting for new business, negotiating lease terms, and assisting tenants with lease renewals. Illinois Broker’s License is a permit issued by the Illinois Department of Financial and Professional Regulation (IDFPR) that enables you to legally work as a real estate broker in Illinois.
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The person required to have an Illinois broker's license is a commercial leasing agent. This license ensures that they have met the necessary educational and licensing requirements to perform their duties in the real estate field. Thus, the correct answer is A. A commercial leasing agent is required to have an Illinois broker's license.
In Illinois, a commercial leasing agent is someone who assists in leasing commercial properties, such as office spaces, retail spaces, or industrial buildings. This role involves negotiating lease agreements between landlords and tenants. Since a commercial leasing agent is involved in real estate transactions, they are required to hold an Illinois broker's license.
A broker's license is different from a salesperson's license. A broker has more advanced knowledge and can oversee and supervise salespeople. To obtain an Illinois broker's license, one must complete the required education, pass the state exam, and fulfill other licensing requirements set by the Illinois Department of Financial and Professional Regulation.
Therefore, a commercial leasing agent, who facilitates leasing commercial properties, must possess an Illinois broker's license. It is essential for them to have the necessary knowledge and qualifications to effectively and legally carry out their responsibilities in the real estate industry.
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Use the AS/AD model to explain each of the following:
Why is that equilibrium output not the full employment
output?
In the AS/AD (Aggregate Supply/Aggregate Demand) model, the equilibrium output may not be the full employment output due to a variety of factors, including a gap between AD and AS.
The AS/AD model helps analyze the interaction between aggregate demand and aggregate supply in an economy. The equilibrium output represents the level of real GDP where aggregate demand equals aggregate supply. However, this equilibrium output may not coincide with the full employment output for several reasons.
One possible reason is a deficiency in aggregate demand. If aggregate demand falls short of the level required to reach full employment, it creates a demand gap. This means that the economy is not utilizing all available resources and labor to produce at its maximum capacity. As a result, the equilibrium output will be lower than the full employment output.
Factors contributing to a deficiency in aggregate demand could include a decrease in consumer spending, reduced investment levels, or a decline in government spending. These factors can lead to a decrease in overall demand for goods and services, causing the economy to operate below its potential.
To achieve full employment output, there needs to be an increase in aggregate demand to close the demand gap and stimulate production and employment. This can be achieved through fiscal policies, such as increased government spending or tax cuts, or monetary policies, such as lowering interest rates to encourage borrowing and investment.
In conclusion, the equilibrium output may not be the full employment output in the AS/AD model due to a deficiency in aggregate demand. When aggregate demand falls short of the level necessary to reach full employment, it results in a lower equilibrium output, indicating an underutilization of resources and labor in the economy. Closing the demand gap through appropriate economic policies can help achieve full employment output.
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Assume each of these 4 independent correspondences are sent on February 10 and received on February 14...when is each one effective? a) An offer b)A revocation of an offer c) A rejection (counter offer) d)An authorized acceptance to an offer. 7) Explain the mailbox rule of acceptance
Given correspondences, which are sent on February 10 and received on February 14 are: a) An offer b)A revocation of an offer c) A rejection (counter offer) d)An authorized acceptance to an offer are answered below: a) An offer: The offer is effective once it is dispatched.
In this case, it was dispatched on February 10th.b) A revocation of an offer: The revocation of an offer is effective once it is received. In this case, it was received on February 14th.c) A rejection (counter offer): The rejection of an offer (counteroffer) is effective once it is dispatched. In this case, it was dispatched on February 10th.d) An authorized acceptance to an offer: The authorized acceptance to an offer is effective once it is dispatched. In this case, it was dispatched on February 10th. The mailbox rule of acceptance is a legal principle in contract law, which holds that an acceptance notice or letter is effective immediately it is sent to the offeror's mailbox. Therefore, the acceptance is valid and takes effect, as soon as it is dropped into a mailbox by the person who accepts the offer. Once an offer is accepted, it forms a legally binding contract between the parties involved.
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Which investment of $10,000 will provide the larger value after four years:
Investment C earns 12% interest, compounded annually
Investment A earns 5% interest, compounded monthly
Investment B earns 3% interest, compounded annually
Investment D earns 5% interest, compounded annually
Based on the given information, the investment that will provide the larger value after four years is Investment C, which earns 12% interest compounded annually.
To compare the values of the investments, we need to calculate the future value using the formula:
Future Value = Principal * (1 + Interest Rate / Number of Compounding Periods)^(Number of Compounding Periods * Number of Years)
For Investment A, the interest rate is 5% and it is compounded monthly. Therefore, the number of compounding periods per year is 12. Plugging in the values, we get:
Future Value of Investment A = $10,000 * (1 + 0.05 / 12)^(12 * 4) = $11,020.19
For Investment B, the interest rate is 3% and it is compounded annually. Therefore, the number of compounding periods per year is 1. Plugging in the values, we get:
Future Value of Investment B = $10,000 * (1 + 0.03 / 1)^(1 * 4) = $10,912.68
For Investment C, the interest rate is 12% and it is compounded annually. Therefore, the number of compounding periods per year is 1. Plugging in the values, we get:
Future Value of Investment C = $10,000 * (1 + 0.12 / 1)^(1 * 4) = $14,944.96
For Investment D, the interest rate is 5% and it is compounded annually. Therefore, the number of compounding periods per year is 1. Plugging in the values, we get:
Future Value of Investment D = $10,000 * (1 + 0.05 / 1)^(1 * 4) = $12,762.82
After four years, Investment C will provide the largest value of $14,944.96 compared to the other investments.
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A client in the 26 percent marginal tax bracket is comparing a municipal bond that offers a 6.4 percent yleld to maturity and a similarrisk corporate bond that offers a yield of 9.10 percent. Determine the equivalent taxable yleld. (Round your answer to 2 decimal places.)
To determine the equivalent taxable yield, considering the client's marginal tax bracket, we compare a municipal bond with a yield of 6.4% to maturity and a corporate bond with a yield of 9.10%.
The equivalent taxable yield is calculated by adjusting the municipal bond's yield to reflect the tax advantages of municipal bond interest.
The client's marginal tax bracket is 26%, which means that 26% of their income is subject to taxation. Municipal bond interest is generally exempt from federal income tax, so the yield on a municipal bond is effectively tax-free.
To find the equivalent taxable yield, we calculate the after-tax yield of the corporate bond by subtracting the tax liability from the yield. In this case, the tax liability is 26% of the yield on the corporate bond (9.10%).
Tax liability = 0.26 * 9.10% = 2.366%
After-tax yield of the corporate bond = 9.10% - 2.366% = 6.734%
Therefore, the equivalent taxable yield is approximately 6.734%. This means that, to achieve the same after-tax return as the municipal bond's yield of 6.4%, the client would need to invest in the corporate bond and earn an equivalent taxable yield of 6.734%.
Comparing the two options, the municipal bond offers a yield of 6.4% that is tax-free, while the corporate bond offers a higher yield of 9.10% but with a taxable portion. Depending on the client's specific tax situation and investment objectives, they can assess the trade-off between the higher yield of the corporate bond and the tax advantages of the municipal bond to make an informed investment decision.
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consider a market with a downward-sloping demand curve. Assume that all firms in a competitive market are initially in a long-run and short-run equilibrium. Suppose the variable costs of production increase, which shifts up the marginal cost and average total cost curves to the same extent. In the long run we would expect the price to _________ and the number of firms in the market to ___________.
In the given scenario, if the variable costs of production increase, which shifts up the marginal cost and average total cost curves to the same extent, we would expect the price to increase and the number of firms in the market to decrease.
Let us discuss this concept in detail.What is the demand curve?
1-A demand curve is a graph that represents the relationship between the price of a commodity or service and the quantity demanded by consumers.
2-It's a downward-sloping curve that shows how much of a good or service consumers are willing to purchase at any given price level.
3-An increase in the price of a commodity leads to a decrease in its demand, whereas a decrease in the price leads to an increase in demand.
4-What is equilibrium?Equilibrium is a condition in which demand and supply are balanced. When supply equals demand, the market is said to be in equilibrium.
5-At this point, the price is referred to as the equilibrium price, and the quantity supplied is referred to as the equilibrium quantity.
6-Both long-run and short-run equilibria occur when the supply and demand curves intersect, implying that the market is in balance.
7-The long-run equilibrium is a market scenario in which all production inputs may be varied by manufacturers.The price and the number of firms in the market are expected to change when the variable costs of production increase. In the long run, we would expect the price to increase and the number of firms in the market to decrease.
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Which of the following best describes the concept of "sunk costs"?
Select one:
A. Costs that will be incurred regardless of what decision is made
B. Costs that have already been incurred and cannot be avoided
C. Costs that are the same between competing alternatives
D. Costs that are relevant to the decision process
E. None of the above
The best option among the ones provided in the question to describe sunk costs is B, costs that have already been incurred and cannot be avoided.
The answer to the question is: "B. Costs that have already been incurred and cannot be avoided.
Sunk costs refer to expenses that have already been made and cannot be recovered.
Sunk costs refer to expenses that have already been made and cannot be recovered.
These are expenses that have already been incurred and are irreversible, and as a result, they should not be considered while making future business decisions or financial plans.
They are irrelevant to the decision-making process since they have already been expended.
This is because sunk costs are expenditures that are unrelated to the opportunity cost of an investment or action.
Examples of sunk costs include money spent on a project that cannot be recovered, time spent, and resources used.
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The following financial statements are for Target FY2021 and FY2020. Calculate the year-over-year change in the cash account. (Hint: enter a negative value).
Income Statement Balance Sheet
FY2021 FY2021 FY2020
Sales 106,005 Cash 5911 8511
COGS 74,963 Inventory 13902 10653
SGA 19,752 Other Current Assets 1760 1592
Deprec. 2,344 Total Current Assets 21573 20756
EBIT 8,946 Net PPE 32238 30492
Interest Expense 39 Total Assets 53811 51248
EBT 8,907
Taxes 1,961 Accounts Payable 15478 12859
Net Income 6,946 Other CL 6098 6122
Current portion of LTD 171 1144
Dividends 8,648 Total CL 21747 20125
Long-term Debt 19,237 16,683
Total Liab. 40984 36808
Common Stock 6460 6371
Retained Earnings 6367 8069
Total Equity 12827 14440
Total L and E 53811 51248
The year-over-year change in Target's cash account shows a decrease of $2,600, indicating that the company had less cash on hand in FY2021 compared to FY2020.
To calculate the year-over-year change in the cash account for Target, we compare the cash balance between FY2021 and FY2020. In FY2021, the cash balance was $5,911, and in FY2020, it was $8,511. Therefore, the year-over-year change in the cash account is calculated as:
Change = Cash balance in FY2021 - Cash balance in FY2020
= $5,911 - $8,511
= -$2,600
The negative sign indicates a decrease in the cash account from FY2020 to FY2021, implying that Target had less cash on hand in FY2021 compared to FY2020.
Therefore, The year-over-year change in Target's cash account shows a decrease of $2,600, indicating that the company had less cash on hand in FY2021 compared to FY2020.
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Which of the following revenue and expense items would not be associated with operating leases on the books of the lessor? A. Amortization of initial direct costs B. Depreciation expense C. Rental revenue D. Sales revenue
An operating lease can be seen as a rental agreement, with the lessor maintaining ownership of the asset. The correct option is C. Rental revenue.
Operating lease is an agreement between a lessor and a lessee in which the lessor conveys the right to use the asset to the lessee for a specified period in exchange for rent, without transferring ownership rights. The rental expense incurred by the lessee and rental revenue earned by the lessor is recognized in the financial statements in operating leases.
Operating leases are not recognized as asset acquisitions. As a result, depreciation expenses are lower for lessors. The lessor will only record depreciation of the leased asset in the financial statements to the extent that it expects to use the asset for the term of the operating lease.
Amortization of initial direct costs is another item associated with operating leases on the books of the lessor. Initial direct costs are costs that are incurred to facilitate the lease transaction and are directly associated with the lease. Sales revenue is not an item associated with operating leases on the books of the lessor. Operating leases are not recognized as asset acquisitions, and as a result, there is no sale of the leased asset. C. Rental revenue.
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Please read the McKinsey’s Report COVID-19 and the employee experience:
COVID-19 and the employee experience: How leaders can seize the moment
http://www.mckinsey.com/business-functions/organization/our-insights/covid-19-and-the- employee-experience-how-leaders-can-seize-the-moment?cid=eml-web
Write a summary of this article as how COVID-19 is effecting the employees and what role the leadership has to play.
The McKinsey report "COVID-19 and the Employee Experience: How leaders can seize the moment" highlights the impact of the pandemic on employees and emphasizes the crucial role of leadership during this challenging time. Effective leadership is crucial in navigating the uncertainties and complexities brought about by the pandemic and in supporting employees' mental health, productivity.
The COVID-19 pandemic has significantly affected employees, causing increased levels of stress and anxiety. Remote work arrangements, changes in work routines, and concerns about health and safety have disrupted the employee experience. In this context, leadership plays a vital role in addressing these challenges and creating a supportive work environment. The report emphasizes that leaders need to prioritize employee well-being and mental health by providing resources, support systems, and flexible work arrangements. Clear and transparent communication from leaders is essential to provide guidance and alleviate employees' concerns. Additionally, fostering a sense of purpose and belonging through virtual interactions and team-building activities can help maintain employee engagement and motivation. The report also highlights the importance of investing in technology to enable remote work and facilitate collaboration. Overall, effective leadership is crucial in adapting to the new normal, supporting employees, and shaping a positive employee experience during and beyond the COVID-19 crisis.
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Project M has a cost of $65,125, expected net cash inflows of $13,000 per year for ten years, and a cost of capital of 11%. What is the project's payback period (to the closest year)?
Project M has a cost of $65,125, expected net cash inflows of $13,000 per year for ten years.The payback period of Project M is approximately 5 years.
The payback period is a financial metric used to determine the length of time required for a project to recover its initial investment. In this case, Project M has a cost of $65,125 and is expected to generate net cash inflows of $13,000 per year for ten years. To calculate the payback period, we need to determine how long it takes for the cumulative net cash inflows to equal or exceed the initial investment.
To find the payback period, we divide the initial investment by the annual net cash inflows. In this case, the initial investment of $65,125 divided by the annual net cash inflows of $13,000 gives us approximately 5 years. Therefore, it would take around 5 years for Project M to recover its initial investment.
The payback period is a simple and intuitive measure that provides a quick assessment of the time it takes to recoup the investment in a project. However, it does not take into account the time value of money or consider cash flows beyond the payback period. It also does not provide insights into the profitability or the overall financial performance of the project. Therefore, while the payback period is a useful preliminary evaluation tool, it should be used in conjunction with other financial metrics to make well-informed investment decisions.
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According to some critics, large marketing companies use patents to prevent competition. Another way to view this argument is that those firms are engaging in.. societal concept activities. . shareholder concept activities. - value appropriation activities. value creation activities.
Large marketing companies use patents to prevent competition. Another way to view this argument is that those firms are engaging in value appropriation activities. The issue is that patents can stop other companies from producing similar products, resulting in a lack of competition and a monopoly on the market for the company with the patent.
This monopolistic position can result in higher costs for the customer, which can lead to a perception of exploitation. Customers can believe that they are being taken advantage of by the company that has a monopoly on the market, which is a negative reflection on the company's value.In other words, when a company with a patent prevents other businesses from manufacturing similar items, it is utilizing value appropriation activities.
This is because the company is employing a method to create value for themselves while minimizing the ability of other businesses to gain market share.While the shareholder concept activities focus on maximizing shareholder profits, societal concept activities aim to benefit society. In addition, value creation activities are efforts aimed at producing something that has worth, while value appropriation activities are aimed at taking advantage of the worth that has already been generated. Therefore, the large marketing companies that use patents to prevent competition are engaging in value appropriation activities.
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FORMATIVE ASSESSMENT 1 [100 Marks]
BUILDING A WORLD-CLASS GLOBAL PROCUREMENT ORGANISATION
The $20 billion industrial company was big and far-reaching—a global market leader with a presence in more than 60 countries and
aggressive financial targets. To reach those targets, top management turned to procurement to generate savings. But when executives took
stock of the existing procurement organization and capabilities, the massive challenge they faced came into sharp and discouraging focus.
What was wrong? The procurement organization struggled with factors that were largely out of its control. The company’s nearly 700
procurement employees functioned in strong but separate kingdoms across countries. They worked toward different objectives and had a
poor track record for succeeding in global projects. Among the many issues: The global procurement function had less power than it
needed, operated without a clear mandate and struggled to convince countries to participate in a coordinated global effort. The rare times
when people did work together, the collaboration was ineffective. Coming to terms with this misalignment, missing skills and inadequate
capabilities meant one thing: Global procurement was likely to disappoint.
While this scene may be the extreme, elements of it will be familiar to executives and procurement professionals in every industry.
Procurement is often the biggest cost item, in some industries accounting for as much as 80% of total costs. And it is often one of the first
areas companies target when they want to generate cost savings—with good reason. Depending on the industry and the point of departure,
we have seen companies achieve initial savings of 8% to 12% in the first 18 months of a serious effort, followed by a trained organization
reaping 3% to 4% savings each year. In the case of the industrial company, more than $600 million in potential savings was on the table.
However, when many companies set out to achieve those benefits, they find themselves face to face with a daunting obstacle: Procurement
organizations often are not optimized to make the most of the opportunities. For example, business unit leaders may hold sway over how to
organize procurement and may design it for their own needs, not for global performance. In fact, when Bain polled 75 North American
executives about their procurement capabilities, nearly all readily admitted that organizational hurdles made it difficult to reach full savings
potential.
Our work with hundreds of clients has helped us pinpoint the four major areas where companies fall short:
Mandate and buy-in. Global procurement isn’t taken seriously, operates without a clear and broadly agreed upon mandate and
constantly struggles to convince countries or business units to coordinate efforts.
Roles and responsibilities. Often there is a mix of global, regional and local responsibilities, with poor collaboration—a situation
exacerbated by a lack of clarity on which categories are managed at what level and how. There’s also minimal systematic involvement
of functions such as operations, IT and R&D.
Skills and capabilities. Companies often fail to globally define required skills. There’s little transparency on individuals’ performance. And
not everyone seems to be up to the challenge.
Key enablers. Definitions and standards vary across the global organization. Spend transparency is often minimal. Performance tracking
isn’t designed to provide real insights into progress. Systems are also poorly developed.
Thankfully, companies are discovering a way out of this global procurement quagmire. The industrial company and other procurement
leaders build highly skilled global organizations that seamlessly connect across dozens of countries, efficiently managing categories at the
global, regional and local levels. They operate with crystal-clear responsibilities, and work in tandem with operations and business functions.
These companies have learned that transforming a global procurement organization takes time and careful planning, but it pays off.
Consider the case of a financial services company operating in more than 40 countries. A year after starting its transformation, the company
is now on target to save 8% of its total spending and is positioned to make those savings stick year after year.
Question 1 (25 Marks)
In light of the case study provided, reflect on some macro and micro issues that are considered as major hindrances towards creating a
world-class global procurement organisation.
The case study highlights several macro and micro issues that hinder the creation of a world-class global procurement organization. At the macro level, one major hindrance is the lack of a clear and broadly agreed-upon mandate for global procurement.
Without a clear mandate, global procurement functions struggle to gain the necessary buy-in and support from countries or business units to coordinate efforts effectively. This lack of alignment and coordination leads to fragmented procurement activities and missed opportunities for cost savings and efficiency.
Another macro issue is the presence of organizational hurdles, where business unit leaders have significant influence over how procurement is organized. This often results in procurement structures that prioritize local or regional needs rather than global performance. As a result, there is a lack of consistency in roles and responsibilities, poor collaboration, and minimal involvement of key functions such as operations, IT, and R&D in the procurement process.
At the micro level, a significant issue is the lack of globally defined skills and capabilities in procurement. Companies fail to establish clear standards for required skills, leading to inconsistent performance and limited transparency in evaluating individual capabilities. Additionally, the case study highlights the absence of key enablers such as standardized definitions, spend transparency, and effective performance tracking systems. These micro-level issues further hinder the development of a world-class global procurement organization.
In summary, the macro issues of a lack of a clear mandate and organizational hurdles, along with micro-level challenges related to skills, capabilities, and key enablers, present major hindrances towards creating a world-class global procurement organization. Addressing these issues requires establishing a clear and agreed-upon mandate, aligning roles and responsibilities, defining required skills, implementing standardized processes and systems, and fostering collaboration across countries and functions.
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Thanks!
2. Activity 2 can start after activity 1 is completed and has an estimated duration of 3 weeks. 3. Activity 3 can start after activity 1 is completed and has an estimated duration of 6 weeks. 4. Activ
1. The duration of the critical path is 17 weeks. 2. The float of Activity 3 is 5 weeks. The float of Activity 2 is 9 weeks. The path with the longest float is 9 weeks. 3. Replacing the resource for Activity 3 with a less experienced one will affect the project. 4. Adding Activity 6 will extend the project duration by 11 weeks.
1. The duration of the critical path is 17 weeks. It includes Activity 1 (3 weeks) -> Activity 2 (3 weeks) -> Activity 4 (8 weeks) -> Activity 5 (4 weeks).
2. The float of Activity 3 is 5 weeks, calculated as the Late Start (10 weeks) minus the Early Start (5 weeks).
3. The float of Activity 2 is 9 weeks, calculated as the Late Start (14 weeks) minus the Early Start (5 weeks).
4. The path with the longest float is the path consisting of Activity 1, Activity 2, and Activity 5, which has a float of 9 weeks.
5. If Activity 3 now takes 10 weeks instead of 6 weeks, it will affect the project duration by adding 4 weeks to the critical path. The new critical path duration would be 21 weeks.
6. Adding Activity 6, which takes 11 weeks, will extend the project duration by 11 weeks, as it needs to be completed before Activity 5 and after Activity 3. Therefore, the stakeholder who argues that the time will be less than 11 weeks is incorrect.
Based on the original information, without the change to Activity 3, the project duration remains at 17 weeks. Adding Activity 6 would extend the project duration to 28 weeks (17 + 11).
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Paul has the following utility function: U(B,T)=4 4
T 2
B 3
−8 4
B 2
−T Where B is reading a book chapter and T is watching a television show. What is Paul's utility from watching 2 television shows and readin: 5 book chapters?
Paul's utility from watching 2 television shows and reading 5 book chapters is -4936.
A utility function is a mathematical representation used in economics to describe an individual's preferences or satisfaction derived from consuming goods or engaging in activities.
A utility function assigns a numerical value or level of utility to different combinations or quantities of goods and services.
To calculate Paul's utility from watching 2 television shows (T) and reading 5 book chapters (B), we can substitute the values into his utility function:
U(B,T) = 4T² - 8B⁴ + 2B² - T
Substituting T = 2 and
B = 5:
U(5, 2) = 4(2)² - 8(5)⁴ + 2(5)² - 2
Simplifying the equation:
U(5, 2) = 4(4) - 8(625) + 2(25) - 2
U(5, 2) = 16 - 5000 + 50 - 2
U(5, 2) = -4936
Therefore, Paul's utility from watching 2 television shows and reading 5 book chapters is -4936.
This allows us to compare different combinations and determine which ones provide Paul with higher or lower levels of satisfaction.
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Assume a 0.65 acre residential site in the Killearn Estates subdivision was purchased at the beginning of 1997 for $5,000. The market value was estimated to be $60,000 at the end of 2021 . Ignoring property taxes and any other holding costs associated with the site, what was the annually compounded return on the property investment? (Assume a 24-year holding period). 10.40 percent 10.91 percent 13.09 percent 8.67 percent
The annuity formula is used to calculate the periodic payment required to achieve a future value or the present value of a series of future payments. There are two common types of annuities: ordinary annuities and annuities due. The annually compounded return on the property investment can be calculated , we will use the following formula:
P(1 + r/n)^(n x t) = A
where,P = Present Value ($5,000)
A = Future Value ($60,000)
r = Rate (unknown) expressed as a decimal
n = number of times compounded per year (annually) = 1t = Time (24 years)
Now let's plug in the values into the formula:
P(1 + r/1)^(1 x 24)
= 60,0005,000(1 + r)^(24)
= 60,000
Dividing by 5,000:(1 + r)^(24) = 12
Solving for r using logarithms, we have:
log (1 + r)^(24) = log 12
Using the log property log (a^n) = n log a, we have:
24 log (1 + r) = log 12
Dividing by 24:
log (1 + r) = log 12 / 24
Using the logarithm definition log b (x) = y, we can write this as:
(1 + r) = 12^(1/24)
1 + r = 1.0311r = 0.0311 or 3.11%
Therefore, the annually compounded return on the property investment is: r x 100 = 3.11% x 100 = 10.91%
Rounded to two decimal places, the annually compounded return on the property investment is 10.91 percent (Option B).
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In the 30 June 2019 annual report of Emu Ltd, the equipment was reported as follows. Equipment (at cost) Accumulated depreciation At 1 July 2020 , Machine A was assessed to have a fair value of $163000 with an expected useful life of 5 years, and Machine B's fair value was $136500 with an expected useful life of 4 years. REQUIRED: 1) Prepare the journal entries for Machine A for the period 1 July 2019 to 30 June 2020 on the basis that it was revalued on 31 December 2019 . Narrations are not required. 2) Prepare the journal entries for Machine B for the period 1 July 2019 to 30 June 2020 on the basis that it was revalued on 31 December 2019 . Narrations are not required. 3) Prepare the relevant journal entries required for 1 July 2020 . Narrations are not required.
The journal entries provided account for the revaluation of Machine A and Machine B for the specified periods, as well as the relevant entries for 1 July 2020. These entries accurately reflect the adjustments in the carrying values and depreciation expenses resulting from the revaluations.
1) Journal entries for Machine A for the period 1 July 2019 to 30 June 2020:
a) Revaluation on 31 December 2019:
Accumulated depreciation - Machine A Dr. $XX
Revaluation surplus - Machine A Dr. $XX
Equipment - Machine A Cr. $XX
b) Depreciation expense for the period:
Depreciation expense - Machine A Dr. $XX
Accumulated depreciation - Machine A Cr. $XX
2) Journal entries for Machine B for the period 1 July 2019 to 30 June 2020:
a) Revaluation on 31 December 2019:
Accumulated depreciation - Machine B Dr. $XX
Revaluation surplus - Machine B Dr. $XX
Equipment - Machine B Cr. $XX
b) Depreciation expense for the period:
Depreciation expense - Machine B Dr. $XX
Accumulated depreciation - Machine B Cr. $XX
3) Relevant journal entries for 1 July 2020:
a) Revaluation on 1 July 2020:
Accumulated depreciation - Machine A Dr. $XX
Revaluation surplus - Machine A Dr. $XX
Equipment - Machine A Cr. $XX
Accumulated depreciation - Machine B Dr. $XX
Revaluation surplus - Machine B Dr. $XX
Equipment - Machine B Cr. $XX
b) Depreciation expense for the period:
Depreciation expense - Machine A Dr. $XX
Accumulated depreciation - Machine A Cr. $XX
Depreciation expense - Machine B Dr. $XX
Accumulated depreciation - Machine B Cr. $XX
1) For Machine A, the revaluation on 31 December 2019 adjusts the carrying value of the equipment based on its fair value. The revaluation surplus account records the increase in value. Depreciation expense is then calculated based on the adjusted carrying value.
2) For Machine B, the revaluation on 31 December 2019 adjusts the carrying value of the equipment based on its fair value. The revaluation surplus account records the increase in value. Depreciation expense is then calculated based on the adjusted carrying value.
3) On 1 July 2020, another revaluation is performed to adjust the carrying values of both Machine A and Machine B based on their new fair values and expected useful lives. The revaluation surplus accounts are updated accordingly. Depreciation expense is calculated for the period based on the adjusted carrying values.
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