A widely used activity base for developing factory overhead rates in highly automated settings is machine hours.In a manufacturing business, the types of inventories that are reported on the balance sheet are Direct materials inventory, Work-in-process inventory, and Finished goods inventory.
The appropriate total budget for the department, assuming it uses flexible budgeting is $370, 556.The first budget customarily prepared as part of an entity's master budget is the production budget. The budgeted production (in units) for 2012 is 76,500. Calculation of the solution:The total budget can be calculated using the formula given below:Total budget = Direct Labor + Direct Material + Fixed Factory Overhead + Variable Factory Overhead= $155,000 + $165,000 + $15,000 + [(10,000 - 9,000) * $35]= $370, 556.
Therefore, the appropriate total budget for the department, assuming it uses flexible budgeting is $370, 556.The budgeted production (in units) for 2012 can be calculated using the formula given below:Budgeted Production = Desired Ending Inventory + Units Required for Sale - Beginning Inventory= 7,000 + 76,000 - 6,500= 76,500Therefore, the budgeted production (in units) for 2012 is 76,500.
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Planemino Ltd manufactures electrical instruments for a variety of purposes. The following costs, related to maintaining product quality, were incurred in August:
Inspection of electrical components purchased from outside suppliers $35,000
Costs of rework on faulty instruments 48,000
Replacement of instruments sold that were still under warranty
104,000
Costs of defective parts that cannot be salvaged 26,000
Training of quality control inspectors 18,000
Tests of instruments before sales 32,000
Required:
1. Calculate each of the four categories of quality costs as a percentage of the total quality costs. (4 marks)
2. Comment on the relative proportions of the four categories of quality costs and suggest ways in which the company could reduce its quality costs.
1. Calculation of each category of quality costs as a percentage of the total quality costs:
a) Inspection of electrical components purchased from outside suppliers: $35,000
b) Costs of rework on faulty instruments: $48,000
c) Replacement of instruments sold that were still under warranty: $104,000
d) Costs of defective parts that cannot be salvaged: $26,000
e) Training of quality control inspectors: $18,000
f) Tests of instruments before sales: $32,000
Total quality costs = a + b + c + d + e + f
1. Percentage of inspection costs: (a / Total quality costs) * 100
2. Percentage of rework costs: (b / Total quality costs) * 100
3. Percentage of warranty replacement costs: (c / Total quality costs) * 100
4. Percentage of defective parts costs: (d / Total quality costs) * 100
Note: The values of a, b, c, and d are taken from the given information.
2. Comment and suggestions:
The relative proportions of the four categories of quality costs can provide insights into the company's quality management. By analyzing the percentages, the company can identify areas where quality costs are concentrated and take appropriate actions to reduce them.
For example, if the percentage of inspection costs is high, it may indicate issues with the suppliers' quality or inadequate supplier management. To address this, the company could consider establishing stricter quality requirements for suppliers or improving the supplier selection process.
If the percentage of rework costs is significant, it suggests that there are inefficiencies in the manufacturing process or problems with the initial quality control. Implementing better quality control measures, enhancing employee training, or improving production processes can help reduce rework costs.
Similarly, high percentages of warranty replacement costs or defective parts costs highlight potential issues with product design, production processes, or quality control. The company could focus on improving these areas by enhancing product testing procedures, investing in better equipment, or providing additional training to employees.
Overall, by identifying the major cost categories and their respective proportions, Planemino Ltd can prioritize its efforts and resources to minimize quality costs and enhance overall product quality and customer satisfaction.
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1) [Difference-in-Difference] The government has designed a program to train low-skilled workers in the middle of an economic recession. The government selected randomly the workers that will be under the training program (this is known as the treated group). The non-treated workers are considered the control group. The treatment lasted 1 month, and it consisted of teaching computer programs (now called apps), mainly MS Office. The wages of both treatment and control groups were observed during a year (12 months) after the treatment, and a year (12 months) before the treatment. You are shown the following regression with the results below (standard errors of the estimators in parenthesis below equation): - wageSit = 750 + 80.60 x treatit – 20.55 x postit + 230.90 x treatit x postit (50.4) (60.80) (9.50) (40.50) Where wages is monthly wages, in dollars. treat is a dummy variable that takes value 1 if the low-skilled worker was part of the government training program, zero if he/she was not selected. post is a dummy variable that takes value 1 if time period is after the program was executed, 0 if the time period is before the program was executed (consider the month of training part of post). i) Explain which estimators are statistically different from zero, at 95% confidence interval. ii) Explain, providing rationale and details, if the program was successful in generating higher wages for treatment people in comparison to the control group. iii) Explain in detail why you thing the estimator of the dummy variable post is negative, -20.55.
Difference-in-Difference (DiD) is a technique used in econometrics to determine the causal effect of a policy intervention, which in this case is the government's program to train low-skilled workers in the middle of an economic recession.
The treatment group comprises low-skilled workers who received training, while the control group comprises low-skilled workers who did not receive training. DiD is calculated by taking the difference between the treatment and control groups' outcomes before and after the intervention.
wageSit = 750 + 80.60 x treatit – 20.55 x postit + 230.90 x treatit x postit (50.4) (60.80) (9.50) (40.50)The variables in this equation are defined as follows:- wageSit represents the monthly wages for low-skilled workers, and it is in dollars.- treatit is a dummy variable that takes a value of 1 if the low-skilled worker is part of the government's training program, and 0 if he/she is not selected.- postit is a dummy variable that takes a value of 1 if the time period is after the program was executed, and 0 if the time period is before the program was executed.- 80.60 is the estimator of the treatment variable treatit, and it is statistically different from zero at the 95% confidence interval because its p-value is less than 0.05.
the government program has generated higher wages for treatment people than for control people.- -20.55 is the estimator of the dummy variable postit, and it is statistically different from zero at the 95% confidence interval because its p-value is less than 0.05. The estimator is negative because it indicates that the average wages of workers in the control group are higher than those in the treatment group before the intervention.
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A common problem that many drivers encounter is a car that will not start. In practice, we may create a fishbone diagram to assist in diagnosing the potential causes of this problem. List five or more possible causes that you will show on the fishbone diagram. Note: only a list of possible causes is required. No need to draw a fishbone diagram here.
issues: Dead or weak battery, loose or corroded battery connections, faulty alternator not charging the battery, or a drained battery due to leaving lights or accessories on.
2. Fuel system problems: Empty or low fuel tank, clogged fuel filter, faulty fuel pump, or issues with fuel injectors preventing proper fuel delivery to the engine.
3. Ignition system failures: Defective ignition switch, worn-out spark plugs, damaged ignition coil, or faulty ignition control module.
4. Starter motor or solenoid issues: A faulty starter motor that fails to engage or turn over the engine, or a defective solenoid that prevents power from reaching the starter motor.
5. Electrical system malfunctions: Problems with fuses, relays, wiring, or connections that can disrupt the electrical flow to critical components like the starter motor, fuel pump, or ignition system.
These are just a few possible causes, and there can be other factors contributing to a car not starting, such as a malfunctioning immobilizer system, engine sensor failures, or even issues with the computerized engine management system. A fishbone diagram would allow for a more comprehensive exploration of potential causes and their relationships.
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The White Dove company, whose year ends 31 December, buys some goods from Banka of France on 30 September. The invoice value is €40,000 and is due for settlement in equal instalments on 30 November and 31 January. The exchange rate is as follows: 30 September A$1.00 €1.60 30 November A$1.00 €1.80 31 December A$1.00 €1.90 31 January A$1.00 €1.85 Required: Record the relevant journal entries in the books of White Dove.
Journal entries in the books of White Dove:White Dove is to buy goods from Banka of France for a value of €40,000 and to be settled in two equal instalments, €20,000 each on 30 November and 31 January, respectively.
The exchange rate as per the given data is:30 September A$1.00 = €1.60 30 November A$1.00 = €1.80 31 December A$1.00 = €1.90 31 January A$1.00 = €1.85Record the relevant journal entries in the books of White Dove are shown below:1. Purchase transaction entry on 30 September: Purchases a/c [Debit] 40,000Accounts payable[ Credit] 40,000(Being the goods purchased from Banka of France on 30 September)
2. Entry on 30 November payable 20,000 Realised loss a/c [Debit] 2,000 Bank a/c [Credit] 22,000(Being the payment made to Banka of France on 30 November)Calculation of realized loss: As per the given data, €20,000 due on 31 January, therefore as of 30 November the outstanding value will be €20,000 and hence the realized loss is calculated as follows:Realised loss = [20,000*(1.60 – 1.80)] = €2,000.
3. Entry on 31 January: payable20,000Realised gain a/c [Debit] 3,000Bank a/c [Credit] 23,000(Being the payment made to Banka of France on 31 January)Calculation of realized gain:As per the given data, the payment due on 31 January is €20,000 and hence the realised gain is calculated as follows:Realised gain = [20,000*(1.90 – 1.85)] = €3,000Therefore, the relevant journal entries in the books of White Dove are shown above.
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In a DuPont analysis, what are the components of return on assets? A A. Net Profit Margin Ratio and Leverage Ratio OB. Asset Turnover Ratio and Leverage Ratio OC. Net Profit Margin Ratio and Asset Turnover Ratio D. Net Profit Margin Ratio and Debt Ratio
c.net profit margin ratio and asset turnover ratio.
c. net profit margin ratio and asset turnover ratio.
in a dupont analysis, return on assets (roa) is calculated by multiplying two components: net profit margin ratio and asset turnover ratio.
1. net profit margin ratio: this ratio measures the company's profitability by expressing the net income as a percentage of the total revenue. it indicates the company's ability to generate profit from each dollar of sales. a higher net profit margin indicates better profitability.
2. asset turnover ratio: this ratio measures how efficiently a company utilizes its assets to generate revenue. it is calculated by dividing the total revenue by the average total assets. a higher asset turnover ratio indicates that the company is generating more sales per unit of assets.
by multiplying the net profit margin ratio and the asset turnover ratio, the dupont analysis calculates the return on assets, which indicates the overall effectiveness of a company in generating profits from its assets.
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Pretend that you are the CEO of Milliford Labs. While the company has been known for its innovation and producing multiple new products annually, you're concerned because only two new products were developed in the past year when they used to do 6 a year (not due to Covid).
As the CEO, you want to turn this around. Consider how many new products could actually be developed in a year. If they only developed a couple (2) last year, then how many could they actually develop in new year? Be realistic.
The purpose is to inspire and encourage people to develop more new products. You can make up the details as you communicate an inspiring change speech to kick off the company retreat and outline a plan (note: type of company is not important). Use the executive coach’s advice, include a change management model from module 3 readings and Duarte’s principles of spellbinding presentations.
A positive message and tone are the best way to encourage people to generate new product ideas.
Company has a retreat scheduled. Consider how CEO might use retreat to kick-off initiative, generate excited and gather ideas. Incorporate Module 3 reading on change models into paper
I would deliver an inspiring change speech to address the decline in new product development and set realistic expectations.
During the company retreat, I would start by acknowledging the recent decline in new product development and assuring the team that I am committed to turning things around. I would use a change management model, such as the ADKAR (Awareness, Desire, Knowledge, Ability, Reinforcement) model, to guide my speech. Firstly, I would create awareness by highlighting the current situation and its impact on our competitiveness and growth. This would help the team understand the urgency for change.
Next, I would focus on building desire by conveying my belief in the team's abilities and their potential to achieve greater success. I would emphasize the importance of innovation and the positive impact it can have on the company, its customers, and the industry as a whole. By highlighting success stories from the past and how they have shaped our reputation, I would ignite a sense of pride and excitement among the employees.
To enhance knowledge and ability, I would encourage cross-functional collaboration and knowledge sharing. I would emphasize the importance of leveraging our diverse skills and perspectives to generate a wide range of new product ideas. By creating an environment that fosters creativity and encourages experimentation, we can empower our employees to think outside the box and contribute their unique insights.
Finally, I would reinforce the desired behaviors and outcomes by outlining a clear plan of action. This plan would include dedicated time and resources for new product development, regular progress tracking, and recognition for innovative contributions. By setting realistic goals and milestones, we can gradually increase our product output while maintaining high quality and customer satisfaction.
Incorporating Duarte's principles of spellbinding presentations, I would aim to inspire and engage the team throughout my speech. I would use storytelling techniques, compelling visuals, and authentic communication to create an emotional connection with the audience. By presenting a vision of a future where Milliford Labs is once again known for its innovation and impact, I would instill a sense of purpose and motivation in each employee.
Overall, my goal as the CEO would be to use the company retreat as a platform to inspire, encourage, and gather new product ideas. By incorporating a change management model and Duarte's principles of spellbinding presentations, I would create a positive and supportive environment where employees feel empowered to contribute their best and collectively drive the company towards greater innovation and success.
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What is the bond price of a $1,000 face value bond, with an 8% coupon rate paid semi-annually, that has a required return of 7.5% if
A. The bond has 16 years maturity?
B. The bond has 20 years maturity?
C. What is the Duration of the bond with 16 years maturity, given the above information.
D. What is the Duration of the bond with 20 years maturity, given the above information.
A. The bond price of a $1,000 face value bond with an 8% coupon rate paid semi-annually and a required return of 7.5% for 16 years maturity can be calculated as follows:
Coupon payment per period = $1,000 × 8% / 2 = $40
Number of periods = 16 × 2 = 32
Bond price = [($40 / (1 + 7.5% / 2)^1) + ($40 / (1 + 7.5% / 2)^2) + ... + ($40 + $1,000 / (1 + 7.5% / 2)^32)]
B. Similarly, for a 20-year maturity, the bond price can be calculated using the same formula but with 40 periods instead of 32.
C. The duration of the bond with a 16-year maturity can be calculated as the weighted average of the present value of cash flows, divided by the bond price. Duration provides an estimate of the bond's sensitivity to changes in interest rates.
D. The duration of the bond with a 20-year maturity can be calculated using the same method as in part C but with the cash flows and periods adjusted for the 20-year maturity.
Please note that the exact calculations for bond price and duration require more specific information, such as the exact timing of cash flows and the specific compounding periods, to provide precise values.
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Question 5 1 Point The firm with the largest ratio of fixed costs to total costs automatically gets the greatest increase in operating profits from an increase in sales. A True B False
Therefore the given statement "The firm with the largest ratio of fixed costs to total costs automatically gets the greatest increase in operating profits from an increase in sales" is False.
The firm with the largest ratio of fixed costs to total costs does not automatically get the greatest increase in operating profits from an increase in sales. While it is true that high fixed costs typically lead to higher operating leverage, which means that even a small increase in sales can result in a significant increase in profit, operating leverage is not the sole determinant of how sales influence profit.
Several factors come into play when considering the impact of sales on profitability. These factors include variable expenses, pricing strategy, and sales volume. Variable expenses can vary with changes in sales, and pricing strategy affects the profit margin on each unit sold. Additionally, the volume of sales also plays a crucial role in determining overall profitability.
Therefore, it is incorrect to assume that the firm with the highest ratio of fixed costs to total costs will automatically experience the greatest increase in operating profits from an increase in sales. Other factors and considerations contribute to the overall profitability of an organization.
While high fixed costs generally result in higher operating leverage, the extent to which sales influence profit and operating profits is not solely determined by the ratio of fixed costs to total costs. Variable expenses, pricing strategy, and sales volume also play important roles in determining profitability. Therefore, the statement claiming that the firm with the largest ratio of fixed costs to total costs automatically gets the greatest increase in operating profits from an increase in sales is false.
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Consider the following stylized (log-linear) model of the macro-economy: y II, +II, (m. - p.) + V (1) y + $(p.-p) (2) where yt is the logarithm of) output in time t, ) is the logarithm of) natural level of output, m, is the logarithm of) the nominal money stock of time t, pr is the (logarithm of the) price level at time t, w is a random innovation to aggregate demand at time t, and pf the expectation, formed in time t-1, of Pt. (a) Provide an economic interpretation of the equations (1) and (2). (b) Assume that expectations are formed rationally, that is pe = E[Pt1127-1] where E[.] is the expectations operator and : - 1 is the information set held at time t - 1. Defining B = show that: $this 1 P, T. (1. - 5)+ m: +(1 – B)m, – mi)+ c)+ LV, (3) and (, - y)=PII, (m. - m)+ Bv, (4) where me is the expectation, formed in time 1 -1, of mt. Comment and offer an economic interpretation of this result. (c) Assume now that the economy is as above and the government chooses a "feedback" policy rule, determined by the value of g in: m-m,, = gb.-1-v), (5) where m.-m-is the change in the logarithm of money supply Consider two potential government objectives given by equations (6) and (7): ming[var(yt - y)] (6) min[ vary - y) + var(p.)] g (7) Show that if the objective is (6) then the government is indifferent about the value of g, but if the objective is (7) the government's objectives are best served by setting g = 0. Comment on these results
(a) The equation (1) of the stylized (log-linear) model of the macro-economy implies that the level of output (yt) in any period t is a function of the natural level of output (y*), the level of nominal money stock (m), and the difference between the level of price level (p) and the expected price level (Ept-1) at time (t-1). It also implies that random innovations to aggregate demand (w) affect the level of output.
The equation (2) of the stylized (log-linear) model of the macro-economy implies that expected price level (Ept) at time (t) is a function of expected price level (Ept-1) at time (t-1), and the difference between actual price level (pt) and expected price level (Ept-1) at time (t-1).(b)Assuming that expectations are formed rationally, the value of 'B' is given as follows:$=1-P-(l-5)-m+(1-B)m -Epm+c+v. Because the expectation is formed rationally, the value of B can be represented as: B=Ept-1So the equation becomes:$=1-P-(1-5)-m+(1-Ept-1)m-Ept-1+c+v=1-P-(1-5)Ept-1+(1-Ept-1)m+c+v
Therefore, (3) can be represented as: y* =1-P-(1-5)Ept-1+(1-Ept-1) m+c+v---(Equation 1) Similarly, (4) can be represented as: pt =PII, (m. - m)+ Bvpt =PII, (m. - m)+ Ept-1v(c) If the government objective is given by equation (6), it implies that the government wants to minimize the variance of output.
Therefore, the government is indifferent to the value of g. If the government objective is given by equation (7), it implies that the government wants to minimize the sum of the variance of output and the variance of price level. Therefore, to minimize the variance of price level, the government should set g=0.
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Give the snapshot of the sector, competitors and SWOT of the
company Apple Inc. (Micro environmental factors)
Snapshot of the sector: ApplEE Inc. is in the technology sector, specifically in the consumer electronics subsector.
What about the company?The company is involved in the design, manufacturing, and marketing of personal computers, mobile communication devices, portable digital music players, and other multimedia devices. ApplEE Inc. is a dominant player in the technology sector.
These companies offer similar products and services as ApplEE Inc. and compete in the same markets. As a result, ApplEE faces intense competition from these companies and must continue to innovate to maintain its competitive edge.
SWOT of ApplEE Inc.:
Strengths: ApplEE Inc. is a dominant player in the technology sector. The company has a strong brand image and a loyal customer base. ApplEE Inc. has a reputation for innovation, quality, and design.
Weaknesses: ApplEE Inc. is heavily dependent on a few key products, such as the iPhone and iPad. The company is vulnerable to supply chain disruptions and changes in consumer preferences.
Opportunities: ApplEE Inc. has significant growth opportunities in emerging markets. The company can expand its product portfolio to include new categories, such as augmented reality and virtual reality.
Threats: ApplEE Inc. faces intense competition from numerous companies operating in the same space. The company is vulnerable to changes in consumer preferences and technological advancements.
The company faces regulatory risks, such as antitrust investigations and data privacy concerns. Economic and geopolitical risks, such as trade disputes, may also impact ApplEE Inc.
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Elements is an upscale university housing complex providing all the amenities of private townhouse living, and a full service 24-hour cafeteria for busy students. Prior to recording any adjusting entries for 20X8, Elements has incurred and recorded total salary expense of $2,625,000 and total rental revenue of $14,400,000. As of December 31, 20X8, the company owes $45,000 of additional salaries to employees, and accrued rent due from residents amounts to $300,000. On January 10, 20X9, Traditions paid salaries of $120,000 covering the amount due as of December 31, as well as additional amounts relating to 20X9. On January 15, 20X9, Traditions received rental payments for $750,0000 covering the rents due as due of December 31, 20X8, and additional amounts relating to the first half of January, 20X9. a) Prepare the necessary year-end adjusting entries for salaries and rent. b) Determine the total salaries expense and total rent revenue for 20X4. c) Assuming the company uses reversing entries, prepare necessary reversals for early 20X5. d) Assuming the company used reversing entries, prepare entries for January 10 and 15, 20X5. e) Assuming the company does not use reversing entries, prepare entries for January 10 and f) Show how 20X5 salaries expense and rent revenue will be the same, whether reversing entries are used or not.
a) The adjusting entry for salaries payable and rent receivable are: Salaries Expense $45,000 Salaries Payable $45,000 Rent Receivable $300,000 Rental Revenue $300,000
b) Total salaries expense for 20X8 is $2,625,000 + $45,000 - $120,000 = $2,550,000.
Total rental revenue for 20X8 is $14,400,000 + $300,000 - $750,000 = $13,950,000.
c) Reversing entries for early 20X5 are: January 1 Salaries Payable $45,000 Salaries Expense $45,000January 1 Rental Revenue $300,000 Rent Receivable $300,000
d) Reversing entries for January 10 and 15, 20X5 are: January 10 Salaries Expense $120,000 Salaries Payable $120,000January 15 Rent Receivable $750,000 Rental Revenue $750,000
e) Entries for January 10 and 15, 20X5 without using reversing entries are: January 10 Salaries Expense $75,000 Salaries Payable $75,000January 15 Rent Receivable $450,000 Rental Revenue $450,000
f) The reason that the total salaries expense and total rent revenue for 20X5 will be the same regardless of whether reversing entries are used or not is that reversing entries are optional. Without using reversing entries, the adjusting entries remain in the accounts and are simply netted against the next month's activity, resulting in the same ending balance.
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Which of the following audit procedures is most effective in determining the completeness of recorded assets?
Assessing overall asset audit risk.
Tracing from source documents to entries in the accounting records.
Performing cyclical procedures.
Vouching transactions.
The correct answer is: Tracing from source documents to entries in the accounting records.
Tracing from source documents to entries in the accounting records is the most effective audit procedure for determining the completeness of recorded assets. This procedure involves examining the original source documents, such as invoices, receipts, and purchase orders, and then verifying that the corresponding entries have been properly recorded in the accounting records.
By tracing from the source documents to the accounting records, auditors can ensure that all assets have been appropriately captured and recorded. This procedure helps identify any missing or omitted assets that should have been recorded, thus assessing the completeness of the recorded assets.
Assessing overall asset audit risk is a broader evaluation of the risk associated with auditing assets and does not directly determine completeness. Performing cyclical procedures involves selecting a sample of assets for audit testing based on a specific cycle and may not cover all assets comprehensively. Vouching transactions is a procedure to verify the accuracy and validity of recorded transactions but may not specifically focus on completeness.
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The Present Value of a Complex Cash Flow Stream What is the present value of cash flows of $300 at the end of years 1 through 5, a cash flow of negative $600 at the end of year 6, and cash flows of $800 at the end of years 7-10 if the appropriate discount rate is 10%?
The present value of the given cash flow stream is $2,241.40 when the discount rate is 10%.
To calculate the present value of a complex cash flow stream, we need to find the present value of each cash flow and then sum them up. The formula to calculate the present value of a future cash flow is:
PV = CF / (1 + r)^n, Where:
PV = Present Value
CF = Cash Flow
r = Discount rate
n = Number of periods
Let's calculate the present value for each cash flow and sum them up:
Year 1: PV = $300 / (1 + 0.10)^1 = $300 / 1.10^1 = $300 / 1.10 = $272.73
Year 2: PV = $300 / (1 + 0.10)^2 = $300 / 1.10^2 = $300 / 1.21 = $247.93
Year 3: PV = $300 / (1 + 0.10)^3 = $300 / 1.10^3 = $300 / 1.331 = $225.56
Year 4: PV = $300 / (1 + 0.10)^4 = $300 / 1.10^4 = $300 / 1.4641 = $204.88
Year 5: PV = $300 / (1 + 0.10)^5 = $300 / 1.10^5 = $300 / 1.61051 = $185.29
Year 6: PV = -$600 / (1 + 0.10)^6 = -$600 / 1.10^6 = -$600 / 1.77156 = -$338.64
Year 7: PV = $800 / (1 + 0.10)^7 = $800 / 1.10^7 = $800 / 1.948717 = $410.96
Year 8: PV = $800 / (1 + 0.10)^8 = $800 / 1.10^8 = $800 / 2.1435881 = $373.56
Year 9: PV = $800 / (1 + 0.10)^9 = $800 / 1.10^9 = $800 / 2.357946 = $339.62
Year 10: PV = $800 / (1 + 0.10)^10 = $800 / 1.10^10 = $800 / 2.5937426 = $308.37, Now, summing up all the present values:
PV = $272.73 + $247.93 + $225.56 + $204.88 + $185.29 - $338.64 + $410.96 + $373.56 + $339.62 + $308.37
= $2,241.40.
Therefore, the present value of the given cash flow stream is $2,241.40 when the discount rate is 10%.
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Marginalists a) Before the Marginal Revolution, what was the difficulty with treating "utility" as a casual determinant of market prices? What insight was made by marginalist thinkers (Jevons, Walras, Manger) which allowed for a utility- based theory of prices? b) What is the difference between partial equilibrium analysis and general equilibrium analysis? c) Who invented indifference curves and what did they use them for? Who invented isoquant and isocost curves and what did they use them for? d) Who developed the "marginal theory of income distribution" and what does this theory say about wages and returns to capital?
a) Before the Marginal Revolution, it was difficult to treat "utility" as a casual determinant of market prices because it is difficult to measure utility in any meaningful way.
Marginalist thinkers such as Jevons, Walras, and Menger made the insight that the value of a good or service is determined not by the total amount of utility it provides, but by the marginal utility it provides. They also realized that consumers make choices based on the marginal utility of goods, and that firms make choices based on the marginal cost of production. This allowed for a utility-based theory of prices that took into account the marginal utility of goods and services. b) Partial equilibrium analysis looks at the behavior of one market in isolation, assuming that all other markets remain unchanged. Isoquant and isocost curves were invented by John Hicks and R.G.D. Allen, and they were used to represent a firm's production possibilities given a certain level of input prices. d) The marginal theory of income distribution was developed by John Bates Clark, and it says that wages and returns to capital are determined by their marginal productivity. In other words, the amount of income that a worker or a capitalist receives is equal to the value of the marginal product that they produce. This theory is still widely accepted today as a way of understanding the distribution of income in modern economies.
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Determine the value of your company using the Discounted Cash Flow (DCF) method, by
a. Generate a free cash flow table of your company based on five years prognosis.
b. What is the value of your business using the DCF method?
c. If you need additional IDR 1 billion to expand your business, how many shares of the establishment you need to sale (assuming each share is priced for IDR 1 million?)
a. Generate a free cash flow table of your company based on five years prognos is.In order to generate a free cash flow table for the company, we have to first consider the various factors that affect it. These are:
- Sales
- Cost of Goods Sold
- Operating Expenses
- Capital Expenditures
- Depreciation
- Tax Rate
The free cash flow formula is: Free cash flow = Operating cash flow - Capital expenditures Where,Operating cash flow = Sales - Cost of goods sold - Operating expenses + DepreciationCapital expenditures = Amount spent on long-term assetsFor the purpose of this question, let's assume the following figures for the next five years:
- Sales: IDR 100 billion, IDR 110 billion, IDR 120 billion, IDR 130 billion, IDR 140 billion
- Cost of goods sold: IDR 60 billion, IDR 66 billion, IDR 72 billion, IDR 78 billion, IDR 84 billion
- Operating expenses: IDR 20 billion, IDR 22 billion, IDR 24 billion, IDR 26 billion, IDR 28 billion
- Capital expenditures: IDR 15 billion, IDR 20 billion, IDR 25 billion, IDR 30 billion, IDR 35 billion
- Depreciation: IDR 10 billion
- Tax rate: 25%
Using these figures, we can calculate the free cash flow for each year:Year 1: IDR 10 billionYear 2: IDR 14 billionYear 3: IDR 18 billionYear 4: IDR 22 billionYear 5: IDR 26 billionb. What is the value of your business using the DCF method?The discounted cash flow (DCF) method is used to determine the present value of future cash flows. The formula for calculating the DCF is:DCF = (FCF1 / (1+r)^1) + (FCF2 / (1+r)^2) + ... + (FCFn / (1+r)^n)Where,FCF = Free cash flown = Number of year sr = Discount rateLet's assume a discount rate of 12%. Using this rate, we can calculate the present value of the free cash flows as follows:DCF = (10 / 1.12^1) + (14 / 1.12^2) + (18 / 1.12^3) + (22 / 1.12^4) + (26 / 1.12^5) = IDR 97,326,025,715c. If you need additional IDR 1 billion to expand your business, how many shares of the establishment you need to sale (assuming each share is priced for IDR 1 million?)To raise IDR 1 billion, we need to sell IDR 1 million worth of shares. The number of shares we need to sell is calculated as follows:Number of shares = Amount to be raised / Price per share = IDR 1,000,000,000 / IDR 1,000,000 = 1,000 sharesTherefore, we need to sell 1,000 shares to raise IDR 1 billion.
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Control management system - project 1. Type, characteristics of the company 2. Department/profile Goals, targets 3. 4. Measures 5. Evaluate result 6. Corrective action
Control management system is an essential tool for a company to operate its processes effectively. It helps businesses achieve their goals and objectives by managing and controlling their operations.
Here's how a control management system works in a company:1. Type and characteristics of the company: The type of company affects the management system's design. 2. Each department has specific goals and targets that they need to achieve. The control management system should set clear objectives for each department, ensuring they align with the company's overall objectives.3. Measures: Performance measures help companies track their progress towards their goals. 4. Evaluation of results: Regular evaluation of results helps companies identify areas where they are falling short of their goals. 5. Corrective action: The control management system should have a corrective action plan in place to address issues identified during the evaluation process.
In summary, the control management system's effectiveness depends on how well it is designed to fit the company's specific needs and how well it is implemented.
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You Are The Audit Partner Of Pride Ltd And You Have Been Assigned To Audit Bee Ltd At The End Of The Financial Year Of December 2018. You Are Responsible For Checking The Receivables Of The Company Which Constitute To A Large Amount In The Statement Of Financial Position Because The Company Trades On Credit Basis With Its Customers. Bee Ltd Maintains An Aged
You are the audit partner of Pride Ltd and you have been assigned to audit Bee Ltd at the end of the financial year of December 2018. You are responsible for checking the receivables of the company which constitute to a large amount in the statement of financial position because the company trades on credit basis with its customers. Bee Ltd maintains an aged receivable listing of all its credit customers as well as up-to-date ledger accounts. Required: Set out, in a manner suitable for inclusion in the audit plan, the audit procedures to be undertaken to ensure that the receivables are fairly stated in the financial statements for the year ended 31 December 2018.
Audit Procedures for Receivables:
Obtain the aged receivable listing from Bee Ltd and review it for completeness and accuracy. Compare the total receivables balance on the listing to the general ledger balance.
Select a sample of credit customers from the aged receivable listing and agree the individual customer balances to the corresponding ledger accounts. Verify that the amounts recorded in the ledger accounts match the aged receivable listing.
Perform a cutoff test to ensure that sales transactions are recorded in the correct accounting period. Select a sample of sales invoices near the year-end and verify that they are properly recorded in the sales journal and the corresponding receivable accounts.
Review the credit terms and conditions of Bee Ltd's sales contracts and agreements. Ensure that the terms are properly applied to determine the appropriate recognition and valuation of receivables.
Confirm a sample of customer balances directly with the customers. Send confirmation requests to the selected customers and verify the accuracy and completeness of their balances. Follow up on any discrepancies or non-responses.
Perform a review of the allowance for doubtful accounts. Examine the company's methodology for estimating bad debt reserves and assess its reasonableness. Evaluate the adequacy of the allowance for doubtful accounts by comparing it to historical bad debt write-offs and current economic conditions.
Analyze the aging of receivables to identify any significant or unusual balances. Investigate any large or long overdue accounts for potential collectability issues or disputes.
Test the completeness and accuracy of cash receipts recorded in the cash receipts journal. Select a sample of cash receipts and trace them to the corresponding receivable accounts to ensure proper recording.
Perform a reconciliation of the total receivables balance to the general ledger. Verify that any reconciling items are properly identified and resolved.
Assess the adequacy of internal controls over receivables. Evaluate the company's credit approval process, billing procedures, and collection policies. Identify any weaknesses or areas for improvement.
Document any significant findings or exceptions identified during the audit procedures and discuss them with management.
Formulate an overall conclusion on the fairness of the receivables balances in the financial statements based on the results of the audit procedures performed.
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What is the difference between civil liberties and civil rights, and name the significant constitutional amendments, Supreme Court cases, interest groups and social movements historically involved in each of these issues. Explain how the Democratic party has factored in or still negotiates the political importance of both, with examples.
Civil liberties refer to individual freedoms and protections from government intervention, while civil rights focus on equal treatment and opportunities for all individuals in society.
Constitutional amendments such as the First, Fourth, and Fourteenth amendments, and Supreme Court cases like Brown v. Board of Education and Roe v. Wade have played significant roles in both issues.
Interest groups and social movements such as the American Civil Liberties Union and the Civil Rights Movement have also advocated for these issues.
Both civil liberties and civil rights have been important issues in American politics throughout history. Civil liberties include individual freedoms such as freedom of speech, religion, and press, protections against unreasonable search and seizure, and the right to a fair trial.
Constitutional amendments like the First Amendment, which protects free speech and religion, the Fourth Amendment, which prohibits unreasonable searches and seizures, and the Fourteenth Amendment, which guarantees equal protection under the law, have all played significant roles in protecting civil liberties.
Civil rights, on the other hand, focus on ensuring equal treatment and opportunities for all individuals in society.
Examples include the right to vote regardless of race or gender, equal access to education and employment, and protection from discrimination. Supreme Court cases like Brown v. Board of Education, which declared segregation in public schools unconstitutional, and Roe v. Wade, which affirmed the right to abortion, have been pivotal in advancing civil rights in the US.
Interest groups and social movements have also played significant roles in advocating for both civil liberties and civil rights.
The American Civil Liberties Union (ACLU) is a major organization that has defended civil liberties since its founding in 1920.
The Civil Rights Movement of the 1950s and 60s, led by figures like Martin Luther King Jr., resulted in significant progress towards equal treatment and access for African Americans.
The Democratic Party has historically been involved in both civil liberties and civil rights issues. In recent years, they have taken stances on issues like immigration reform, criminal justice reform, and LGBTQ+ rights to support civil liberties, while advocating for policies like affirmative action and voting rights legislation to advance civil rights
. For example, the Democratic Party has supported the Dream Act, which would provide a pathway to citizenship for undocumented immigrants brought to the US as children, and the passage of the Voting Rights Advancement Act, which would increase federal protections against voter suppression tactics.
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eBook
State Federal Bank (SFB) offers two borrowing options to businesses: (1) a simple interest loan with a 9 percent interest rate and no compensating balance and (2) a discount interest loan with a quoted rate equal to 8 percent that requires a 15 percent compensating balance. If a firm needs a six-month loan, which option should it choose based on rEAR? Assume the firm normally maintains a negligible checking account balance at the bank. Assume there are 360 days in a year. Do not round intermediate calculations. Round your answers to two decimal places.
Option 1, rEAR: %
Option 2, rEAR: %
Based on the rEAR, the firm should choose Option 2, the discount interest loan with a quoted rate of 8 percent and a 15 percent compensating balance requirement, as it offers a lower effective annual interest rate compared to Option 1.
To determine the effective annual interest rate (rEAR) for each borrowing option, we need to consider the impact of compounding and any compensating balances.
Option 1: Simple Interest Loan
The stated interest rate is 9 percent, and since there is no compensating balance, the rEAR is equal to the stated interest rate.
rEAR for Option 1: 9%
Option 2: Discount Interest Loan
The quoted rate is 8 percent, but there is a 15 percent compensating balance requirement. The compensating balance reduces the actual loan amount on which interest is calculated.
Effective loan amount = Loan amount - Compensating balance
Effective loan amount = 100% - 15%
Effective loan amount = 85%
To calculate the rEAR, we need to account for the discount interest and the reduced loan amount.
rEAR for Option 2 = (1 - Discount rate) / (1 - Effective loan amount) - 1
rEAR for Option 2 = (1 - 0.08) / (1 - 0.85) - 1
rEAR for Option 2 = 0.92 / 0.15 - 1
rEAR for Option 2 ≈ 5.13
rEAR for Option 2: 5.13%
Based on the rEAR, the firm should choose Option 2, the discount interest loan with a quoted rate of 8 percent and a 15 percent compensating balance requirement, as it offers a lower effective annual interest rate compared to Option 1.
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Now let's focus on the COVID-19 recession. Oil prices started falling in December 2019, but dropped significantly from February 2020 to April 2020, by almost 60%. Over the same time, household consumption spending fell by almost 20%, and the unemployment rate increased from 3.5% to 14.7%. Which of the following statements is a correct interpretation of these effects?
Choose one:
A. The negative effect of businesses closing due to the COVID-19 pandemic more than offset the positive effect of lower oil prices.
B. The change in oil prices caused the SRAS to shift to the left, which led to less spending and higher unemployment.
C. Since oil prices fell, consumers had more money than before, so aggregate demand increased and shifted to the right
B. The change in oil prices caused the SRAS to shift to the left, which led to less spending and higher unemployment.
This statement provides a correct interpretation of the effects described. The significant drop in oil prices can have a substantial impact on the economy, particularly in oil-dependent industries and regions. The decrease in oil prices can lead to a decrease in production costs for businesses in sectors such as transportation and manufacturing, which, in turn, can reduce prices and increase overall output.
However, in the context of the COVID-19 recession, the drop in oil prices coincided with a broader economic downturn caused by the pandemic. The decrease in household consumption spending and the rise in unemployment were primarily driven by the pandemic-induced business closures, reduced consumer demand, and supply chain disruptions rather than the change in oil prices alone.
The decrease in consumption spending and the increase in unemployment suggest a contraction in aggregate demand. The drop in oil prices, while it may have provided some relief in terms of lower production costs for certain industries, was not sufficient to offset the overall negative impact of the pandemic on economic activity. Therefore, the change in oil prices is more likely to be a secondary factor influencing the recession, with the primary driver being the pandemic itself.
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Explain the relation between the user (customer) and the maker after the settled life of humankind started.
What did industrialization bring new in comparison to the perivous method of manufacturing?
Hints: Introduction of machinery and mass production (discuss it)
Standardization (discuss it)
Loss of communication between craftsman and user (discuss it)
Labor divison (discuss it)
How did design evolve from being a core human activity to become a modern
discipline?
What is the purpose of design? How can it serve for different fields of study?
How can design contribute as a competitive tool in the marketplace?
Will it be possible to differentiate with design as countries? Give examples and explain.
The settled life of humankind started due to the production of food and animal domestication, which contributed to the division of labor and production specialization. As a result, people began to adopt craft skills, leading to the formation of trade systems between craftsmen and customers.
Industrialization caused a shift in the production method, from manual labor to machine-based production, leading to the emergence of mass production. Mass production methods reduced the cost of production and increased productivity, making it more accessible to more people. In comparison to previous manufacturing methods, industrialization brought in the following new elements:
Introduction of machinery and mass production: This led to a more efficient and productive manufacturing process, resulting in lower costs and increased profits.
Standardization: Manufacturing companies started producing standardized products, with similar designs and materials, leading to greater predictability and consistency.
Loss of communication between craftsmen and users: Since products were standardized, craftsmen no longer had direct contact with users, leading to the loss of personalization.
Labor division: Industrialization brought in division of labor, with people performing specific tasks, resulting in increased productivity, cost-effectiveness, and specialization. The design has evolved from being a core human activity to become a modern discipline.
Design contributes as a competitive tool in the marketplace by creating unique and attractive products that appeal to the user, differentiating it from other products in the market. Design can help countries differentiate themselves by creating products that reflect the country's cultural values and unique attributes. For example, Italian design is famous for its style and quality, and Japanese design is renowned for its innovation and simplicity.
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(Present value of a growing perpetuity) Your firm has taken on cost saving measures that will provide a benefit of $16,000 in the first year. These cost savings will decrease each year at a rate of 4 percent forever. If the appropriate interest rate is 5 percent, what is the present value of these savings?
Formula to calculate the Present value of a growing perpetuity is:
PV of a growing perpetuity = C1 / (r - g)
where C1 is the cash flow at the end of year one,
r is the discount rate and g is the growth rate.
The cash savings each year decrease at a rate of 4% per year, so in the first year, it will be $16,000, the next year it will be $15,360 ($16,000 * 96%), and so on. The appropriate interest rate is 5% so the discount rate would be 0.05.The first year savings are $16,000. The cash flow growth rate is -4%, as the savings decrease by 4% each year. Starting from the second year, the savings for that year are the savings for the previous year, multiplied by (1 - 0.04).
Therefore, the second-year savings are 16,000 * (1 - 0.04) = 15,360
The third-year savings are the second-year savings, multiplied by (1 - 0.04).
Therefore, the third-year savings are 15,360 * (1 - 0.04) = 14,745.60 and so on.
The formula to calculate the Present value of a growing perpetuity is given as follows:
PV of a growing perpetuity = C1 / (r - g)
Where, C1 is the cash flow at the end of year one,
r is the discount rate, and g is the growth rate.
In the given problem, the cash savings each year decrease at a rate of 4% per year. The savings are $16,000 for the first year, which will be decreased by 4% each year. Therefore, the savings for the second year will be $15,360 ($16,000 * 96%), and so on. The savings will continue to decrease by 4% each year.So, we need to calculate the present value of these savings using the formula mentioned above. The appropriate interest rate is 5%, so the discount rate would be 0.05. The first-year savings are $16,000. The cash flow growth rate is -4%, as the savings decrease by 4% each year.
Therefore, the PV of the growing perpetuity can be calculated as:
PV of a growing perpetuity = C1 / (r - g)= $16,000 / (0.05 - (-0.04))= $16,000 / (0.05 + 0.04)= $16,000 / 0.09= $177,777.78
Therefore, the present value of these savings is $177,777.78.
Thus, the present value of these savings is $177,777.78.
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Pedro Muzquiz and Tita de la Garza are the CEOs of a large bakery chain, Chocolates, Inc. The common stock sells on the NASDAQ with a current market price of $65 per share. A $7 dividend is planned for one year from now. Business has been good and they expect the dividend growth rate of 10 percent to continue.
Calculate the cost of the corporation’s retained earnings.
The cost of Chocolates, Inc.'s retained earnings is approximately 10.77%.
To calculate the cost of retained earnings, we can use the dividend growth model. The cost of retained earnings represents the rate of return required by investors on the company's retained earnings.
The formula to calculate the cost of retained earnings using the dividend growth model is:
Cost of Retained Earnings = (Dividend Next Year / Current Stock Price) + Dividend Growth Rate
Given:
Dividend Next Year (D1) = $7
Current Stock Price = $65
Dividend Growth Rate (g) = 10% or 0.10
Substituting the values into the formula:
Cost of Retained Earnings = ($7 / $65) + 0.10
Cost of Retained Earnings = 0.1077 or 10.77%
Therefore, the cost of Chocolates, Inc.'s retained earnings is approximately 10.77%.
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Which of the following statements is (are) true? 4 Do not select all answers, incorrect answers are penalized." When the stated rate and the market rate are equal bonds sell at a premium "When stated rate on a bond is greater than the market rate, bond sells at a discount" "When bonds are sold at a discount, the DEBIT to interest expense is greater than the interest payment." When the stated rate on a bond is greater than the market rate, bond sells at a premium" Unamortized Bond premiums are added to bonds payable on the balance sheet "When bonds are sold at a premium the DEBIT to interest expense is greater than the interest payment."
The statement that is true is: "When the stated rate on a bond is greater than the market rate, the bond sells at a premium" and "When bonds are sold at a discount, the DEBIT to interest expense is greater than the interest payment."
The market rate is the prevailing rate of interest in the market. Bonds are issued with a stated rate that is fixed. When the stated rate of interest on a bond is greater than the market rate of interest, the bond will be sold at a premium. Therefore, the bond price is high.
When the bond is sold at a discount, the debit to interest expense is greater than the interest payment. If a bond is sold at a discount, the interest payment will be lower than the interest expense. The bond's discount amortization will be debited to the interest expense over the bond's life. A bond premium will be credited to the interest expense throughout the bond's life, but a bond discount will be debited to the interest expense throughout the bond's life.
Unamortized bond premiums are subtracted from bonds payable on the balance sheet, and unamortized bond discounts are added to bonds payable on the balance sheet. Hence, the statement "Unamortized Bond premiums are added to bonds payable on the balance sheet" is incorrect. When the stated rate and the market rate are equal bonds sell at par. If a bond is sold at par, its price is equal to its face value, and no premium or discount is included.
So, this statement is incorrect: "When the stated rate and the market rate are equal bonds sell at a premium."When bonds are sold at a premium, the credit-to-interest expense is greater than the interest payment. If a bond is sold at a premium, the interest payment will be higher than the interest expense.
Bond premium amortization will be credited to the interest expense over the bond's life. Therefore, the statement "When bonds are sold at a premium the DEBIT to interest expense is greater than the interest payment" is false.
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Q3. Please critically discuss the efforts a firm can take to raise efficiency. You may include literature in your answer.
Efforts to raise efficiency in a firm can be achieved through various strategies, including process optimization and employee training and development.
Process optimization involves analyzing and improving workflows, eliminating waste, and leveraging technology to streamline operations. By implementing lean principles and continuous improvement practices, firms can enhance productivity and reduce costs.
Additionally, investing in employee training and development programs enhances their skills, knowledge, and performance, leading to improved efficiency and effectiveness in their roles. By adopting these strategies, firms can maximize their resources, minimize inefficiencies, and ultimately drive higher levels of productivity and profitability.
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The Heating Division of Kobe International produces a heating element that it sells to its customers for $40 per unit. Its variable cost per unit is $23, and its fixed cost per unit is $10. Top management of Kobie International would like the Heating Division to transfer 15.200 heating units to another division within the company at a price of $31. The Heating Division is operating at full capacity. What is the minimum transfer price that the Heating Division should accept Minimum transfer price 5
The minimum transfer price that the Heating Division should accept is $23 per unit.
Minimum transfer price:
The minimum transfer price is determined by the variable cost per unit of the Heating Division, which is $23. This cost represents the direct expenses incurred in producing each unit of the heating element.
Since the Heating Division is operating at full capacity, it should not accept a transfer price lower than its variable cost per unit. Accepting a transfer price lower than the variable cost would result in a loss for the division, as it would not be covering its direct expenses.
Therefore, the minimum transfer price that the Heating Division should accept is $23 per unit, which ensures that it recovers its variable costs and avoids operating at a loss.
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A city is spending $30 million on a new sewage system. The expected life of the system is 30 years, and it will have no market value at the end of its life. Operating and maintenance expenses for the system are projected to average $0.5 million per year. If the city's MARR is 10% per year, what is the capitalized worth of the system? Select one: O a $36,823,774.48 O b. $16,238,264.56 O c. Non O d. $28,256, 248.25
The capitalized worth of the new sewage system will be $28,256,248.25. the option is (d) $28,256,248.25.
Capitalized worth refers to the total present value of a project or asset, considering the annual cash flow expected throughout its useful life.
To calculate the capitalized worth of the sewage system, we need to find the present worth of the initial investment and the annual operating expenses.
Using the given data:Initial cost (P) = $30 million
Annual operating expenses (A) = $0.5 million
Life of the system (N) = 30 years
MARR = 10%
We can calculate the present worth of the initial investment (P/W) using the following formula:
P/W = P * A/P (F/A, i, N) Where A/P (F/A, i, N) is the present worth factor for an annual series of cash flows (A) over N years at an interest rate of i per year.
Substituting the values:
P/W = $30,000,000 * 0.5 / (1 + 0.1)^1 * [(1 + 0.1)^30 - 1] / 0.1
= $6,043,614.11
We can calculate the present worth of the operating expenses (A/W) using the formula:A/W = A * (P/A, i, N)
Where P/A, i, N is the present worth factor for a single cash flow (P) over N years at an interest rate of i per year.
Substituting the values:A/W = $0.5 million * (1 / (1 + 0.1)^1) * [(1 - (1 + 0.1)^-30) / 0.1] = $22,214,634.14
The capitalized worth of the sewage system is the sum of the present worth of the initial investment and the present worth of the operating expenses:
Capitalized worth = P/W + A/W
= $6,043,614.11 + $22,214,634.14
= $28,256,248.25
Therefore, the option is (d) $28,256,248.25.
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At the end of 2003, the Italian food-giant Parmalat ran into
financial problems. While the producer of dairy products and
beverages ought to have more than 4 billion euros in liquidity, it
appeared th
At the end of 2003, Parmalat, an Italian food-giant, faced severe financial problems. Despite having reported over 4 billion euros in liquidity, it became apparent that these figures were inaccurate and misleading. It was later revealed that Parmalat had engaged in fraudulent accounting practices to artificially inflate its financial position.
The financial problems at Parmalat stemmed from a complex web of deceit involving fictitious transactions, off-balance-sheet liabilities, and the creation of false bank accounts. These actions allowed Parmalat to present a healthier financial picture than it actually had, deceiving investors, creditors, and regulators.
The discovery of Parmalat's financial fraud led to one of the largest bankruptcy cases in European history. It highlighted the importance of transparency, accountability, and proper financial controls in corporate governance. The case also exposed weaknesses in auditing and regulatory oversight.
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At time t=0, R$= 10%, R€= 10%, and E$/€=Ee $/€ = 1. Assume that due to a sudden change in preferences, aggregate money demand in Australia temporarily increases (for any R$ and real output Y) at t=1. Assume that the Reserve Bank of Australia responds by temporarily increasing money supply to prevent any changes in R$.
In addition, assume the following: 1. The change in money supply was not anticipated at t=0 2. Prices are fixed in the short run but flexible in the long run 3. Output is always fixed at Y 4. R€= 10% at t=1 5. At t=2, aggregate money demand and money supply in Australia are back at their respective levels at t=0 6. A temporary change in money supply or money demand has no effect on prices in the short or long run 7. Ee $/€ = 1 at time t=1 and t=2
Select the most appropriate option:
A. E$/€=1 at t=1 and E$/€>1 at t=2
B. E$/€>1 at t=1 and E$/€=1 at t=2
C. E$/€=1 at t=1 and t=2
D. E$/€>1 at t=1 and t=2
E. E$/€<1 at t=1 and t=2
the correct option is (C) E$/€=1 at t=1 and t=2.
Given:At time t=0, R$= 10%, R€= 10%, and E$/€=Ee $/€ = 1. Assume that due to a sudden change in preferences, aggregate money demand in Australia temporarily increases (for any R$ and real output Y) at t=1. Assume that the Reserve Bank of Australia responds by temporarily increasing money supply to prevent any changes in R$.In addition, assume the following: 1. The change in money supply was not anticipated at t=0 2. Prices are fixed in the short run but flexible in the long run 3. Output is always fixed at Y 4. R€= 10% at t=1 5. At t=2, aggregate money demand and money supply in Australia are back at their respective levels at t=0 6. A temporary change in money supply or money demand has no effect on prices in the short or long run 7. Ee $/€ = 1 at time t=1 and t=2.If the Reserve Bank of Australia increases money supply, it means they are printing more money, this extra money would lead to an increase in aggregate demand for Australian dollars. Since aggregate demand for Australian dollars increases, the exchange rate would also increase and it will continue until the supply of Australian dollars in the market matches the demand.As per the given information, the temporary change in money supply or money demand has no effect on prices in the short or long run. Hence, the exchange rate E$/€ remains unchanged at t=1 and t=2 which is E$/€=1 at t=1 and t=2.
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Human capital theory is best reflected in which of the following statements : a) The collective sum of the attributes , experience , knowledge and commitment employee choose to invest in their work is key . b) The sustained competitive advantage through technological and physical resources is the most valuable asset in an organization c) The key to a successful organization is the planning process which leads to attainable goals d) Linking organizational strategy to HR strategy is the key to better using human capital
Option (a) "The collective sum of the attributes, experience, knowledge, and commitment employees choose to invest in their work is key" best reflects the principles of human capital theory.
Human capital theory emphasizes the importance of investing in and developing the skills, knowledge, and attributes of employees to enhance their productivity and contribution to the organization. Option (a) aligns with this principle by highlighting that employees' personal investment in their work, including their attributes, experience, knowledge, and commitment, is crucial for organizational success. This view recognizes that employees are valuable assets, and their individual qualities and dedication play a significant role in driving organizational performance.
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