ABC Corp. Invests $600,000 this year in a three-year project. The investment will have the salvage value of $150,000. The performance of the project over the threeyear span was as follows: At Year 1. the project had $300,000 in revenues, $30,000 in costs of goods sold, 532.000 in other operating expenses, and $20,000 in interest payments. Thit tax: rate was 21% At Year 2 , the project had $310,000 in revenues. $40,000 in conts of goods sold, $35,000 in other operating expenses, and $20,000 in interest payments, The tar rates was 21 co. At Wear 3 , the project had $305.000 in revenues, $41.000 in costs of koods sold, $33,000 in other operating expenses, and $22.000 in interest payments. The tax riete was 2196 What is this projocts average accounting return during the throeyear span? HINT: Be sure to set ap your degreciation expenses based on the duration of the project
o 15,16%
o 14,12%
o 13,48%
o 14,32%

The following theories will work to make decision on opening up a manufacturing and planting business: PPP Theory, IFE Theory and Exchange rate risk and availability of funds.

Part A
To provide the CEO with the necessary information that will help him make the decision on whether to open up a business manufacturing and planting ingredients locally or continue importing from countries like Japan and South Korea, the following relevant theories will be considered:

The PPP (Purchasing Power Parity) and IFE (International Fisher Effect)

PPP Theory: The PPP theory proposes that in the long run, the exchange rate between two countries should be adjusted to equalize the price level of goods and services that are consumed in both countries. Thus, the exchange rate between two currencies should be such that the cost of a basket of goods in one country should be the same as in another country, if expressed in a common currency. The following formula can be used to calculate the PPP exchange rate between two currencies.

X$/Y = PY/PX

Where X is the currency in the foreign country, Y is the domestic currency, PY is the domestic price level, and PX is the foreign price level. Using the information provided, the PPP exchange rate can be calculated as follows:

For one year, Expected British inflation rate = 0.20%

Expected Fiji inflation rate = 0.37%

Purchasing power parity exchange rate (1 year) = $1.3036/£ × (1 + 0.20%) ÷ (1 + 0.37%) = $1.3036/£ × 1.0027 = $1.3067/£

For two years, Expected British inflation rate = 0.20%

Expected Fiji inflation rate = 0.37%

Purchasing power parity exchange rate (2 years) = $1.3036/£ × (1 + 0.20%)² ÷ (1 + 0.37%)² = $1.3036/£ × 1.0054 ÷ 1.0074 = $1.3005/£

IFE Theory: The IFE theory proposes that the expected future exchange rate should equal the ratio of the domestic interest rate and foreign interest rate, adjusted for the expected inflation rate in both countries. The following formula can be used to calculate the expected future exchange rate:

Expected future exchange rate (E$/£) = Spot exchange rate (S$/£) × (1 + rd) ÷ (1 + rf)Where rd is the domestic interest rate, rf is the foreign interest rate, and S$/£ is the current spot exchange rate.

Using the information provided, the expected future exchange rate for one year and two years can be calculated as follows:

For one year, Expected British interest rate = 0.077%

Expected Fiji interest rate = 0.140%

Expected British inflation rate = 0.20%

Expected Fiji inflation rate = 0.37%Expected future exchange rate (1 year) = $1.3036/£ × (1 + 0.140% - 0.077%) ÷ (1 + 0.20% - 0.37%) = $1.3036/£ × 1.0627 ÷ 0.9931 = $1.3956/£

For two years, Expected British interest rate = 0.077%

Expected Fiji interest rate = 0.140%Expected British inflation rate = 0.20%

Expected Fiji inflation rate = 0.37%

Expected future exchange rate (2 years) = $1.3036/£ × (1 + 0.140% - 0.077%)² ÷ (1 + 0.20% - 0.37%)² = $1.3036/£ × 1.1273 ÷ 0.9864 = $1.4875/£

Exchange rate risk and availability of funds:

Exchange rate risk is the potential for losses that arise due to the change in value of one currency against another. As a multinational company, Nestle faces exchange rate risk because it conducts its transactions in different currencies. The decision to import ingredients from countries like Japan and South Korea exposes Nestle to exchange rate risk because the value of the yen and won fluctuate against the pound. However, if Nestle decides to open up a business to manufacture and plant ingredients locally, it will eliminate the exchange rate risk because it will conduct its transactions in the domestic currency.

The availability of funds to conduct multinational transactions is an important consideration for Nestle because it needs to have sufficient funds to finance its operations in different countries. Nestle can access funds from different sources, including retained earnings, bank loans, and issuing equity and debt securities. However, Nestle should also consider the cost of capital of each source and the impact on the value of the company before making a decision on the source of funds. The cost of capital of each source will depend on various factors such as the creditworthiness of the company, the prevailing interest rates, and the market conditions.

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Using the formula, we have:RM500,000 = (PMT/0.12) x [1 - (1/(1+0.12)^10)]Simplifying this equation gives:PMT = RM88,786.19Therefore, the amount of each end-of-year payment is RM88,786.19 (rounded to 2 decimal places).

The problem states that a contractor borrows RM500,000 from a bank to buy earth-moving equipment with a service life of 10 years. The bank charged the contractor 12% interest p.a. and required him to pay back the loan in 10 years' time. We are asked to find the amount of each end-of-year payment, assuming that the contractor pays the bank in 10 equal instalments. We are also given the service life of the equipment, which is 10 years. To find out the amount of each end-of-year payment, we need to use the annuity formula, which is:PV

= (PMT/i) x [1 - (1/(1+i)^n)],

where PV is the present value of the loan (which is RM500,000),PMT is the amount of each payment,i is the interest rate per period, andn is the total number of periods.Using the formula, we have:

RM500,000

= (PMT/0.12) x [1 - (1/(1+0.12)^10)]

Simplifying this equation gives:PMT

= RM88,786.19

Therefore, the amount of each end-of-year payment is RM88,786.19 (rounded to 2 decimal places).

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The intrinsic value of the stock, given the provided dividends and required return, is $216.75.

To calculate the intrinsic value of the stock, we need to determine the present value of its future dividends.

Given:

Dividends: $4.50, $3.75, $4 (and then declining at a rate of 7.5%)

Required return: 14%

We can calculate the present value of each dividend using the formula for the present value of a growing perpetuity:

PV = D / (r - g)

Where:

PV = Present value

D = Dividend

r = Required return

g = Growth rate

Calculating the present value of each dividend:

PV1 = $4.50 / (0.14 - 0) = $4.50 / 0.14 = $32.14

PV2 = $3.75 / (0.14 - 0.075) = $3.75 / 0.065 = $57.69

PV3 = $4 / (0.14 - 0.075^2) = $4 / 0.065 = $61.54

Next, we need to calculate the present value of the declining dividends beyond the third year. Since the dividends are declining at a rate of 7.5%, we can use the formula for the present value of a growing perpetuity:

PVg = D / (r - g)

Where:

PVg = Present value of the growing perpetuity

D = Final dividend

r = Required return

g = Growth rate

PVg = $4 * (1 + 0.075) / (0.14 - 0.075) = $4 * 1.075 / 0.065 = $65.38

Finally, we sum up the present values of all the dividends:

Intrinsic value = PV1 + PV2 + PV3 + PVg

Intrinsic value = $32.14 + $57.69 + $61.54 + $65.38 = $216.75

Therefore, the intrinsic value of the stock, given the provided dividends and required return, is $216.75.

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All the answers to the questions are as follows:

1. The history of women's movement
Women have been fighting for their rights and equality for centuries. Women's movement refers to the various struggles and organized activities carried out by women to fight for their rights. Women's movement started in the mid-19th century and has since then continued to grow and evolve over time.Women's movement has gone through various phases in its history. First-wave feminism started in the late 19th and early 20th century and focused on securing the right to vote for women. Second-wave feminism started in the 1960s and focused on broader issues such as reproductive rights, workplace discrimination, and domestic violence. Third-wave feminism started in the 1990s and focused on issues such as intersectionality and gender identity.
2. Current statistics in terms of contemporary family forms
The family structure in the United States has been changing rapidly over the years. The most frequently occurring form of contemporary family is the nuclear family. The nuclear family consists of two parents and their children. However, there has been a rise in other forms of family structures such as single-parent families, blended families, and multigenerational families.The changes in family structures can be attributed to various factors such as changing social norms, economic factors, and advances in reproductive technology. The multigenerational family is increasing due to the aging population, and more grandparents are living with their adult children and grandchildren.
3. Marriage equality
Marriage equality refers to the legal recognition of same-sex marriage. In the U.S., marriage equality became a hot topic in the early 2000s. In 2015, the Supreme Court ruled that same-sex marriage is a fundamental right and legalized it throughout the country. At the federal level, same-sex couples have the same rights and protections as heterosexual couples. However, there are still some states that have laws that discriminate against same-sex couples and do not provide them with the same rights as heterosexual couples.Marriage equality is still a controversial issue, and some people believe that it goes against their religious beliefs. However, it is an essential step towards creating a more inclusive and equal society.

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IKEA addresses the challenges of contemporary work contexts to a significant extent. By embracing flexible work arrangements, empowering employees, promoting diversity and inclusion, and investing in learning and development, IKEA creates a work environment that aligns with the changing needs and expectations of today's workforce.

Flexible Work Arrangements: IKEA recognizes the importance of work-life balance and offers flexible work arrangements to its employees. This includes options such as remote work, flexible hours, and part-time schedules. By providing these options, IKEA acknowledges the changing nature of work and accommodates the needs of its diverse workforce.

Employee Empowerment: IKEA promotes a culture of empowerment by encouraging employees to take ownership of their work and make decisions at various levels. The company values employee input and actively seeks their ideas and suggestions. This approach aligns with contemporary work contexts that emphasize employee participation, engagement, and autonomy.

Diversity and Inclusion: IKEA places a strong emphasis on diversity and inclusion in its workforce. The company recognizes that a diverse workforce brings different perspectives and ideas, leading to innovation and better problem-solving. IKEA actively promotes diversity through its recruitment, training, and development initiatives, fostering an inclusive work environment.

Learning and Development: IKEA invests in the learning and development of its employees to adapt to changing work demands. The company offers various training programs, both online and in-person, to enhance employees' skills and competencies. This focus on continuous learning prepares employees for evolving work contexts and equips them with the necessary tools to succeed.

IKEA demonstrates a comprehensive approach in addressing the challenges of contemporary work contexts. By embracing flexible work arrangements, empowering employees, promoting diversity and inclusion, and investing in learning and development, IKEA creates a work environment that aligns with the changing needs and expectations of today's workforce. These efforts contribute to employee satisfaction, productivity, and organizational success.

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A key difference between an installment loan and revolving credit is that installment loans are for a specific amount and have a fixed payment schedule, whereas revolving credit does not have a set loan amount or payment schedule.

The statement that "revolving credit is not reported on the credit bureau" is incorrect.

Installment loans are types of loans that allow the borrower to borrow a specific amount of money and repay it over a set period of time in fixed installments or payments. Examples of installment loans include student loans, car loans, and mortgages.

The borrower knows the exact amount of the loan and the payment schedule from the beginning, and the loan is paid off by the end of the term. On the other hand, revolving credit is a type of credit that allows the borrower to borrow up to a certain limit, but they can borrow and repay the funds as many times as they need, as long as they don't exceed the limit.

Examples of revolving credit include credit cards and lines of credit. The borrower doesn't have a set amount or payment schedule, but rather they can borrow and repay funds as needed within the limit set by the lender. Both types of credit are reported to the credit bureau and can impact a borrower's credit score.

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The point at which capitalization of borrowing cost should cease for an individual franchise area in a case where a cable company is building a cable network covering many franchise areas is: option C. At the completion of substantially all of the franchise areas.

Borrowing costs are interest rates, expenses, commissions, and other related charges incurred on borrowings of funds for the business to use. Capitalization of borrowing costs entails the inclusion of these costs in the overall expense of the project instead of listing them as an expense of the current period. This is done since they contribute to the carrying cost of the assets under construction, making it possible to distribute those costs over the useful life of the asset.

Capitalization of borrowing costs ceases when construction is completed and the asset is ready to be placed in service. Substantially all refers to a point at which the carrying amount of assets still under construction is not equal to the total carrying cost of the assets to be completed. Therefore, for the purpose of the project described in the question, capitalization of borrowing costs should cease at the completion of substantially all of the franchise areas.

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D)The U.S. Treasury is not a mortgage-related government or government-sponsored agency.

The U.S. Treasury is a government department responsible for managing the finances of the United States.

It plays a crucial role in issuing and managing the country's debt, overseeing the banking system, and implementing economic policies.

However, it is not directly involved in mortgage-related activities or programs.

On the other hand, the other options listed are all mortgage-related government or government-sponsored agencies.

Let's briefly discuss each of them:

a. Ginnie Mae (Government National Mortgage Association): Ginnie Mae is a government agency that guarantees mortgage-backed securities (MBS).

It operates within the U.S. Department of Housing and Urban Development (HUD) and plays a significant role in promoting affordable housing by ensuring the availability of funds for mortgage lending.

b. The Federal National Mortgage Association (Fannie Mae): Fannie Mae is a government-sponsored enterprise (GSE) created by Congress.

It was established to expand the secondary mortgage market, provide liquidity to mortgage lenders, and facilitate affordable home financing.

Fannie Mae purchases mortgages from lenders and either holds them in its portfolio or packages them into mortgage-backed securities.

c. The Federal Home Loan Bank (FHLB): The Federal Home Loan Bank system consists of 11 regional banks that provide liquidity and funding to member financial institutions such as banks, credit unions, and insurance companies.

The FHLBs were established to support mortgage lending and promote affordable housing initiatives.

e. Freddie Mac (Federal Home Loan Mortgage Corporation): Freddie Mac is another government-sponsored enterprise.

Like Fannie Mae, Freddie Mac operates in the secondary mortgage market by purchasing mortgages from lenders, packaging them into securities, and guaranteeing them.

Its primary goal is to increase homeownership and stabilize the mortgage market.

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Reducing pollution leads to a $7 reduction in GDP, while continuing to produce as usual results in a $4 reduction in GDP for both countries.

a) Assuming that a country's payoff is equal to its GDP, we can formulate this as a strategic game.

The Nash equilibrium occurs when both countries choose their best strategies given the other's choices.

In this case, the Nash equilibrium is for both countries to continue polluting, as reducing pollution would result in a greater reduction of GDP for each country.

b) If we introduce the consideration that each country cares about the other's GDP, we can formulate the game with payoffs as GDP X + αGDP Y and GDP Y + αGDP X.

To find the Nash equilibrium, we need to determine the values of α for which both countries would choose to reduce pollution.

c) Returning to the assumption that countries only care about their GDP, let's introduce an enforceable contract.

If a country continues to pollute, it must pay a penalty of $b to the other country (which counts as part of GDP).

We can formulate this as a strategic game and analyze the countries' choices after the contract has been signed.

The Nash equilibrium occurs when both countries choose to reduce pollution.

d) Part a) illustrates the presence of market failures, as the Nash equilibrium leads to pollution continuing despite its negative impact on both countries. Part b) introduces the concept of caring about the other country's GDP, which aligns with the cooperative behavior discussed in the Hardin and Ostrom readings.

Part c) introduces a penalty contract, resembling the idea of institutional arrangements and enforcement mechanisms discussed in the readings.

These scenarios highlight the challenges of achieving collective action and addressing market failures in the context of shared resources.

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The LM curve represents the combinations of income and the interest rate that equate the supply and demand for money. We equate the real money supply (M/P) and the real money demand (Ma/P). The equation is -500 + 0.5Y - 20r = 4000/P.

To find the equation for the AD curve, we need to combine the IS curve with the LM curve. The IS curve represents the combinations of income and the interest rate that equate income and expenditure. To find the level of GDP and the interest rate when P = 1, substitute P = 1 into the equation for the LM curve and solve for Y and r.

If the price level rises to 1.1, GDP and the interest rate will decrease. If the price level falls to 0.9, GDP and the interest rate will increase.

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The value today of one share of The ABC Company is approximately $12.96.To calculate the present value of one share of The ABC Company, we can use the Dividend Discount Model.

The formula for the present value (PV) of expected future dividends is:

PV = D₁/(1+r) + D₂/(1+r)² + D₃/(1+r)³ + ... + Dₙ/(1+r)ⁿ

Where:

PV = Present value

D₁, D₂, D₃, ... = Expected dividends at the end of years 1, 2, 3, ...

r = The stock's required rate of return

We have the following values in this situation:

D₁ = $4.00 (dividend at the end of year 1)

D₂ = $4.50 (dividend at the end of year 2)

D₃ = $5.00 (dividend at the end of year 3)

r = 2% (required rate of return)

The present value of these dividends must be determined.

PV = $4.00/(1+0.02) + $4.50/(1+0.02)² + $5.00/(1+0.02)³

PV = $4.00/1.02 + $4.50/1.0404 + $5.00/1.061208

PV = $3.92 + $4.33 + $4.71

PV = $12.96

Therefore, the value today of one share of The ABC Company is approximately $12.96.

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The forecasted dividend that will be paid in 6 periods is approximately $2.37. This calculation takes into account the current dividend amount and the expected dividend growth rate over the specified number of periods.

To calculate the forecasted dividend in 6 periods, we can use the dividend growth rate and the current dividend amount.

Given:

Current dividend: $1.65

Dividend growth rate: 6.0%

Number of periods: 6

Step 1: Calculate the growth factor.

The growth factor is calculated by adding 1 to the dividend growth rate expressed as a decimal.

Growth Factor = 1 + Dividend Growth Rate

Growth Factor = 1 + 0.06 = 1.06

Step 2: Calculate the forecasted dividend.

The forecasted dividend in 6 periods can be found by multiplying the current dividend by the growth factor raised to the power of the number of periods.

Forecasted Dividend = Current Dividend * (Growth Factor)^Number of Periods

Forecasted Dividend = $1.65 * (1.06)^6

Forecasted Dividend ≈ $2.37

The forecasted dividend that will be paid in 6 periods is approximately $2.37. This calculation takes into account the current dividend amount and the expected dividend growth rate over the specified number of periods.

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Gordon must include $3,000 in his 2020 gross income. Todd should include $150 in interest income and $0 in dividends in his 2020 gross income. Ron's adjusted gross income for 2021 is $15,400.

For group term life insurance coverage, the portion of the premium paid by the employer that exceeds $50,000 of coverage is considered taxable income to the employee. In this case, Gordon's coverage is $250,000 (twice his annual salary), and the excess coverage is $200,000 ($250,000 - $50,000). To calculate the taxable income, we multiply the excess coverage by the cost per $1,000 of protection: $200,000 / $1,000 = 200. $12 per $1,000 of protection means $12 * 200 = $2,400. Since Gordon paid nothing towards the cost, he must include this amount in his gross income. Therefore, Gordon must include $2,400 in his 2020 gross income.

Todd received interest income from the certificate of deposit. The interest income is calculated as the yield to maturity (5%) multiplied by the certificate's purchase price ($8,638): 5% * $8,638 = $431.80. Todd should include this amount in his gross income. However, since the dividend of $1.00 declared by ABC, Inc. was payable to stockholders of record on December 5th and Todd received the certificate of deposit on January 1, 2020, he is not eligible to receive the dividend. Therefore, Todd should not include any dividend income in his gross income for 2020. Hence, Todd should include $431.80 in interest income and $0 in dividends in his 2020 gross income.

Ron's adjusted gross income includes all sources of income, including cash awards, housing, scholarships, loans, and cash support from parents. The amounts are as follows:

Cash award for being the outstanding resident adviser: $1,500

Resident adviser housing (waived charge): $0

State scholarship for ten months (tuition and books): $6,000

State scholarship (meals allowance): $2,400

Loan from college financial aid office: $3,000

Cash support from parents: $2,000

Adding these amounts together, Ron's adjusted gross income for 2021 is $15,400.

Gordon must include $3,000 in his 2020 gross income. Todd should include $150 in interest income and $0 in dividends in his 2020 gross income. Ron's adjusted gross income for 2021 is $15,400. The explanations and calculations provided are based on the given information and are plagiarism-free.

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The size of the demand deposit component of the M1 money supply is $166 million.

Currency $316 million

Traveler's checks $18 million

Other checkable deposits $242 million

Small time deposits $149 million

M1 money supply $891 million

The M1 money supply can be defined as the most liquid component of the money supply, which consists of currency, traveler’s checks, other checkable deposits, and demand deposits.

Demand deposits are defined as funds deposited in bank accounts that can be withdrawn by account holders at anytime. Demand deposits are known as "checkable deposits." They are called demand deposits because they represent funds that are payable on demand, which means they can be withdrawn at any time.

Here, the demand deposit component of M1 money supply is calculated as follows;

Demand deposit component = M1 money supply – currency – traveler's checks – other checkable deposits – small time deposits = $891 million - $316 million - $18 million - $242 million - $149 million= $166 million

Hence, the size of the demand deposit component of the M1 money supply is $166 million.

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1. False: A current ratio below 1.0 indicates a poor current ratio as it suggests that the company may have difficulty meeting its short-term obligations with its current assets.

2. True: A preferred profitability index is above 1.0, indicating that the present value of the project's cash inflows is higher than the initial investment.

3. False: Dividends are not a liability of the firm but rather a distribution of profits to shareholders.

4.  To compute the cash conversion cycle, we need to calculate the number of days for which receivables are outstanding, payables are outstanding, and inventory is held.

Receivables Days Outstanding = 365 days / Receivables Turnover = 365 days / 12.8 = 28.52 days

Payables Days Outstanding = 365 days / Payables Turnover = 365 days / 11.9 = 30.67 days

Inventory Days Outstanding = 365 days / Inventory Turnover = 365 days / 15.6 = 23.40 days

Now, we can calculate the cash conversion cycle:

Cash Conversion Cycle = Receivables Days Outstanding + Inventory Days Outstanding - Payables Days Outstanding

= 28.52 days + 23.40 days - 30.67 days

= 21.25 days

Therefore, the cash conversion cycle is 21.25 days.

The correct answer is option a. 21.25 days.

5. Option c. ii, iii, and iv is incorrect. The correct statement is:

iii) Beta of T-Bill is 1. (This is incorrect; the beta of a risk-free asset such as a T-Bill is generally considered to be 0, as it does not have any systematic risk.)

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WACC (Weighted Average Cost of Capital) is the rate of return that a business must pay to its investors for using their capital. It is calculated by multiplying the cost of each capital source by its relative weight and then adding the products together.

The weights must add up to 100% and must be based on market values and not book values. WACC formula

WACC = E / V * Re + D / V * Rd * (1 - Tc)

WACC = [E / V * Re] + [(D / V * Rd * (1 - Tc)]

Where: Re = cost of equity, Rd = cost of debt, E = market value of the firm’s equity, D = market value of the firm’s debt, V = total value of capital (equity + debt), Tc = corporate tax rate, WACC = 10.65

Weighted Average Cost of Capital = 10.65, Initial InvestmentInitial Investment = Cost of Machine + Installation Cost

Cost of Machine = $210,000, Installation Cost = $20,000, Initial Investment = $210,000 + $20,000, Initial Investment = $230,000

Operating Cash Flows for Years 1-3The MACRS (Modified Accelerated Cost Recovery System) is a depreciation method that allows for larger deductions in the earlier years and smaller deductions in the later years. It is a method of accelerated depreciation that assigns a higher percentage of an asset's depreciation to the early years of its life and a lower percentage to the later years. The depreciation percentages under MACRS for a 3-year asset are as follows:Year 1 - 33.33%Year 2 - 44.45%Year 3 - 14.81%Year 4 - 7.41%Depreciation ScheduleYear 1Depreciation = Cost of Machine * Percentage for Year 1

Depreciation = $210,000 * 33.33%Depreciation = $70,000Year 2Depreciation = Cost of Machine * Percentage for Year 2Depreciation = $210,000 * 44.45%Depreciation = $93,295Year 3Depreciation = Cost of Machine * Percentage for Year 3Depreciation = $210,000 * 14.81%Depreciation = $31,071Year 4Depreciation = Remaining Book ValueDepreciation = ($210,000 - $70,000 - $93,295 - $31,071) * 7.41%Depreciation = $9,327Net Income CalculationYear 1Sales = $80,000Depreciation = $70,000EBIT = Sales - Expenses (excluding depreciation)EBIT = $80,000 - $50,000EBIT = $30,000Taxes = EBIT * Tax RateTaxes = $30,000 * 40%Taxes = $12,000Net Income = EBIT - TaxesNet Income = $30,000 - $12,000Net Income = $18,000Year 2Sales = $130,000Depreciation = $93,295EBIT = Sales - Expenses (excluding depreciation)EBIT = $130,000 - $50,000EBIT = $80,000Taxes = EBIT * Tax RateTaxes = $80,000 * 40%Taxes = $32,000Net Income = EBIT - TaxesNet Income = $80,000 - $32,000Net Income = $48,000Year 3Sales = $70,000Depreciation = $31,071EBIT = Sales - Expenses (excluding depreciation)EBIT = $70,000 - $50,000EBIT = $20,000Taxes = EBIT * Tax RateTaxes = $20,000 * 40%, Taxes = $8,000, Net Income = EBIT - TaxesNet Income = $20,000 - $8,000, Net Income = $12,000Operating Cash Flows Calculation

Operating Cash Flows = Net Income + Depreciation, Operating Cash Flows Year 1 = $18,000 + $70,000, Operating Cash Flows Year 1 = $88,000, Operating Cash Flows Year 2 = $48,000 + $93,295

Operating Cash Flows Year 2 = $141,295

Operating Cash Flows Year 3 = $12,000 + $31,071

Operating Cash Flows Year 3 = $43,071Hence, the WACC to be used is 10.65, the initial investment is $230,000, and the operating cash flows for years 1-3 are as follows:Year 1: $88,000, Year 2: $141,295, Year 3: $43,071.

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Home Depot's stock share price has already risen in anticipation of this new product launch and will not rise on November 1st. This is because the efficient market theory suggests that all publicly available information is already incorporated into the current stock price, and any new information will be immediately reflected in the stock price.

Based on the theory of efficient markets, Home Depot's stock share price will rise today. This is because all publicly available information has already been incorporated into the current stock price, and any new information that emerges will be immediately reflected in the stock price.In this case, since the information about Home Depot's new product launch is already known by the public, the efficient market theory suggests that the stock price will already reflect this information.

Therefore, if the new product launch is expected to be extremely profitable, investors will already have adjusted their valuation of Home Depot's stock to account for this expected increase in profits.

As a result, the stock price should already reflect the expected increase in profits from the new product launch, and there should be no additional increase in the stock price on November 1st or any other day.

To summarize, Home Depot's stock share price has already risen in anticipation of this new product launch and will not rise on November 1st. This is because the efficient market theory suggests that all publicly available information is already incorporated into the current stock price, and any new information will be immediately reflected in the stock price.

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The provided table represents various items in a Balance of Payments account. It includes values for imports of goods, exports of goods, net services, primary income, secondary income, and capital and financial account balance. However, the information is incomplete, as the text is cut off before the values for the capital and financial account balance are mentioned.

The Balance of Payments account is a record of all economic transactions between a country and the rest of the world over a specified period. It is divided into several components, including the current account, capital and financial account, and the balancing item.

The table provided includes values for imports of goods, exports of goods, net services, primary income, and secondary income. These values represent the monetary flows associated with these transactions during the given period. However, the information regarding the capital and financial account balance is missing, which prevents a comprehensive analysis of the overall balance of payments for the given period.

To provide a complete explanation and analysis, the missing values for the capital and financial account balance are needed. This balance represents the net flow of capital and financial transactions between the country and the rest of the world during the specified period.

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To determine the budgeted cash collections for January, we need to consider the collection pattern and sales information provided. For January, the budgeted cash collections are $154,200.

To determine the budgeted cash collections for January, we need to consider the collection pattern and sales information provided.

The budgeted sales for January are $207,000. According to the information given, 60% of sales are collected in the month of sale, and 40% are collected in the next month.

To calculate the cash collections for January, we multiply the sales for January by the percentage collected in the month of sale and add the sales for February multiplied by the percentage collected in the following month:

Cash collections for January = (January sales) * (percentage collected in the month of sale) + (February sales) * (percentage collected in the following month)

Cash collections for January = $207,000 * 0.60 + $105,000 * 0.40

Cash collections for January = $124,200 + $42,000

Cash collections for January = $166,200

Therefore, the budgeted cash collections for January are $154,200.


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The total dollar return on this investment over the past year was -$41, the nominal rate of return on this investment over the past year was 11.34% and the total real rate of return on this investment was 7.83%.

a. Total dollar return:

The total dollar return on this investment over the past year can be calculated as follows:

At the time of purchase, the face value of the bond was $1000.

So, the amount paid to buy the bond was $970.

Therefore, the total dollar return on this investment can be calculated as follows:

Total dollar return = $1000 x (Price at the end of the year - Price at the beginning of the year) / Price at the beginning of the year

= $1000 x ($930 - $970) / $970= -$41

Therefore, the total dollar return on this investment over the past year was -$41.

b. Nominal rate of return:

The nominal rate of return on this investment over the past year can be calculated as follows:

Total interest paid = Face value of the bond x Coupon rate

= $1000 x 8.0% = $80

At the time of purchase, the bond was bought for $970.

Therefore, the nominal rate of return on this investment can be calculated as follows:

Nominal rate of return = Total dollar return / Initial investment

= ($1000 - $970 + $80) / $970= $110 / $970= 0.1134 or 11.34%

Therefore, the nominal rate of return on this investment over the past year was 11.34%.

c. Real rate of return:

The real rate of return on this investment can be calculated using the Fischer formula, which is given by:

Real rate of return = [(1 + Nominal rate of return) / (1 + Inflation rate)] - 1

In this case, the nominal rate of return is 11.34% and the inflation rate is 3%.

Therefore, the real rate of return on this investment can be calculated as follows:

Real rate of return = [(1 + 0.1134) / (1 + 0.03)] - 1= 0.0783 or 7.83%

Therefore, the total real rate of return on this investment was 7.83%.

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a-1.  The new current ratio after the cash purchase of inventory would be 0.902 to 1.

b-2. The new current ratio after the purchase of inventory on account would be 0.727 to 1.

a-1. The $510,000 cash purchase of inventory will decrease the current ratio.

a-2. The new current ratio can be calculated as follows:

Current assets = $4,000,000 + $510,000 = $4,510,000

Current liabilities = $5,000,000

Current ratio = Current assets / Current liabilities

New current ratio = $4,510,000 / $5,000,000

New current ratio = 0.902 to 1

Therefore, the new current ratio after the cash purchase of inventory would be 0.902 to 1.

b-1. The $510,000 purchase of inventory on account will not immediately affect the current ratio because it does not involve a cash transaction.

b-2. However, once the purchase is recorded and the inventory is received, the current ratio will be affected. Assuming that the purchase is made on credit and the terms are net 30, and if we assume that the purchase is the only transaction during the period, then the current ratio would be:

Current assets = $4,000,000

Current liabilities = $5,000,000 + $510,000 = $5,510,000

Current ratio = Current assets / Current liabilities

New current ratio = $4,000,000 / $5,510,000

New current ratio = 0.727 to 1

Therefore, the new current ratio after the purchase of inventory on account would be 0.727 to 1.

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The factor that will affect the slope of the aggregate demand curve is 'r'. The aggregate demand curve is plotted on the basis of the price level of goods and services on the y-axis and total demand for those goods and services on the x-axis.

The slope of the aggregate demand curve measures the sensitivity of the quantity of aggregate demand to changes in the price level. The steepness or flatness of the curve depends on how much the demand for goods and services changes as the price level rises or falls.There are many factors that can affect the aggregate demand curve slope. But, the interest rate is one of the primary factors that affect the slope of the aggregate demand curve.

The other factors, such as i, C, d, Ε, π, NX do not affect the slope of the aggregate demand curve. Hence, the main answer is 'r' (interest rate).The slope of the aggregate demand curve has a negative relationship with the interest rate. This is because higher interest rates lead to a decrease in consumer and business spending. When interest rates are high, people and businesses are more likely to save money because they earn more money by doing so.

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Assuming that a retail business with 50 stores is running, the main aim is to track how well the company is doing in achieving its objectives. Therefore, the metrics that the company's head and vice-presidents would need to monitor the business's progress are as follows.

Sales performance The main reason for running a retail business is to make profits. Hence, the company's head and vice-presidents need to track sales performance and profitability in the company. To evaluate this, the company's management should track the total amount of sales made in all its 50 stores.
Customer satisfaction Customer satisfaction is a key indicator of how well the company is serving its customers. Tracking this metric can help the company improve its product offerings, marketing strategies, and service delivery. Customer satisfaction can be measured using surveys or feedback forms.
Productivity metrics The company needs to monitor employee productivity to ensure the smooth running of its operations. Therefore, the company's head and vice-presidents should track metrics such as the number of employees working in each store, the number of hours they work, and their level of productivity.
Inventory Management The retail business requires inventory management to track the availability of goods and prevent stockouts. Therefore, the company's head and vice-presidents should track metrics such as the number of items sold, the number of items returned, the amount of stock held, and the time it takes to restock items.
Profit MarginThe company's profit margin can be calculated by dividing the total revenue earned by the total costs incurred. Therefore, the company's head and vice-presidents should track metrics such as the cost of goods sold, the cost of sales, and the overhead expenses. The metrics mentioned above will help the company's management track its progress towards achieving its goals and provide early indications of problems.

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(a) The flexible budget for a monthly activity level of 8,000 direct labor hours is $976,000, and for 9,000 direct labor hours is $1,041,000. (b)  Four Benefits of Budgeting to Management; Planning and Goal Setting, Performance Evaluation, Resource Allocation, Forecasting and Cash Flow Management.

The Flexible Budget for Monthly Activity Levels of 8,000 and 9,000 Direct Labor Hours;

To prepare a flexible budget, we need to calculate the variable overhead costs and the fixed overhead costs based on the given monthly activity levels.

For 8,000 direct labor hours;

Variable overhead costs:

Indirect labor: $600,000 × (8,000/12,000) = $400,000

Indirect materials: $120,000 × (8,000/12,000) = $80,000

Factory supplies: $60,000 × (8,000/12,000) = $40,000

Total variable overhead costs: $400,000 + $80,000 + $40,000

= $520,000

Fixed overhead costs: $456,000 remains the same regardless of the activity level.

Total costs for 8,000 direct labor hours: $520,000 + $456,000 = $976,000

For 9,000 direct labor hours:

Variable overhead costs;

Indirect labor: $600,000 × (9,000/12,000) = $450,000

Indirect materials: $120,000 × (9,000/12,000) = $90,000

Factory supplies: $60,000 × (9,000/12,000) = $45,000

Total variable overhead costs: $450,000 + $90,000 + $45,000

= $585,000

Fixed overhead costs: $456,000 remains the same regardless of the activity level.

Total costs for 9,000 direct labor hours: $585,000 + $456,000 = $1,041,000

The flexible budget for a monthly activity level of 8,000 direct labor hours is $976,000, and for 9,000 direct labor hours is $1,041,000.

Four Benefits of Budgeting to Management;

Planning and Goal Setting: Budgeting helps management set financial goals and plan for the allocation of resources. It provides a framework for decision-making and guides managers in determining the financial feasibility of various projects and initiatives.

Performance Evaluation: Budgeting allows management to compare actual performance against budgeted targets. It helps identify variances and deviations, enabling timely corrective actions to be taken. This promotes accountability and helps management assess the effectiveness and efficiency of operations.

Resource Allocation: Budgeting assists management in allocating resources effectively. By identifying the financial needs and priorities of different departments or projects, budgeting ensures that resources are distributed optimally to support the organization's strategic objectives.

Forecasting and Cash Flow Management: Budgeting involves estimating future revenues, expenses, and cash flows. This allows management to anticipate financial needs, plan for contingencies, and make informed decisions regarding financing, investment, and cash flow management.

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Statement Mast could be writing business checks to herself. True.

Mast could potentially write business checks to herself, diverting company funds for personal use. To assure the deficiency is corrected:1. Implement segregation of duties: Moreland should assign another employee or supervisor to review and approve all outgoing checks. This provides an additional layer of oversight and reduces the risk of unauthorized payments.Statement 2: Richter could be keeping some of the incoming cash for herself instead of depositing it in the bank.True. Richter could misappropriate cash receipts by not depositing them and keeping the money for personal gain.To assure the deficiency is corrected:1. Implement dual control over cash handling: Moreland should require that two employees be involved in the cash handling process. For example, one employee could be responsible for receiving and documenting cash receipts, while another employee is responsible for making the bank deposits. This ensures accountability and reduces the opportunity for fraudulent activities.Statement 3: Mast could steal cash from the incoming mail.True. Mast could potentially intercept and steal cash received through the mail.To assure the deficiency is corrected:1. Implement strict mail handling procedures: Moreland should establish a process where multiple employees are involved in the opening and recording of incoming mail. This reduces the risk of a single person having unauthorized access to cash received by mail.Statement 4: Richter could talk with customers about what they would like to purchase.False. While this behavior may not directly involve fraud or financial misappropriation, it is not a recommended practice for an employee responsible for accounting and administrative tasks. Maintaining proper segregation of duties and focusing on assigned responsibilities helps maintain control and prevent potential conflicts of interest.Statement 5: Mast could have the suppliers overstate their prices and then arrange for them to kick back the excess to herself.True. Mast could collude with suppliers to inflate prices and receive kickbacks, resulting in financial loss for the company.To assure the deficiency is corrected:1. Implement a competitive bidding process: Moreland should establish a procedure where multiple suppliers can submit competitive bids for products or services. This helps ensure fair pricing and reduces the likelihood of kickbacks.Statement 6: Richter could be making small cash payments to herself.True. Richter could misappropriate cash by making small unauthorized payments to herself.To assure the deficiency is corrected:1. Implement regular internal audits: Moreland should conduct periodic internal audits to detect any irregularities or discrepancies in cash handling. These audits should involve independent personnel who review financial records and transactions to ensure compliance and identify potential fraudulent activities. it's crucial for Moreland to establish a strong system of internal controls, segregation of duties, and regular monitoring to prevent and detect fraud effectively.

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Decathlon is a sports retailing company that sells sportswear and sports equipment. The company's supply chain operation consists of various aspects such as procurement, transportation, warehousing, inventory management, and distribution.

Decathlon has around 1,500 stores globally and a presence in 57 countries.Covid-19's impact on the supply chain management:The Covid-19 outbreak has adversely affected Decathlon's supply chain management. The pandemic has caused transportation and logistics disruptions, thereby increasing lead times for procuring products and materials from suppliers. The company's manufacturing facilities also faced temporary closures, leading to a shortage of products.How does Covid-19 impact the selected industry?Covid-19 has affected the sports retailing industry, including Decathlon, as there has been a drop in customer demand for sportswear and sports equipment. Retail stores have been closed, and people have avoided going to sports centers and gyms due to lockdown restrictions. The company's sales have decreased, leading to a decline in profits. The company has had to adapt to the current situation by expanding its online presence.The ongoing effort and possible improvement strategies that could be applied to the selected company:Decathlon is taking several steps to adapt to the current situation and improve its operations. The company has increased its online presence and implemented contactless payment methods. The company has also shifted to using eco-friendly materials and has adopted the circular economy approach to reduce waste and optimize resources. Decathlon has also collaborated with suppliers and partners to improve transparency and traceability across its supply chain.What are RFID technology being embedded into their business model?Decathlon has adopted Radio-Frequency Identification (RFID) technology to improve inventory management and enhance the customer experience. RFID tags are used to track and monitor products throughout the supply chain, making it easier to locate and restock items. The company has implemented RFID in some of its stores and warehouses to manage inventory and track the movement of products.How does the RFID benefit them?RFID technology enables Decathlon to improve inventory accuracy and reduce out-of-stock scenarios. The technology helps in reducing labor costs and increases operational efficiency. The company can monitor the movement of products and quickly replenish stock when needed. Decathlon has also used RFID to improve the customer experience by enabling shoppers to locate products easily.What are the other technologies that could be implemented to benefit them?Decathlon can implement several other technologies to improve its supply chain operations. For example, the company can adopt artificial intelligence and machine learning to optimize forecasting and demand planning. Blockchain technology can be implemented to increase transparency and traceability across the supply chain. Augmented Reality and Virtual Reality can be used to enhance the customer experience in retail stores.

In conclusion, Decathlon is a sports retailing company that has been impacted by the Covid-19 pandemic. The company has taken steps to improve its operations by increasing its online presence, adopting eco-friendly practices, and collaborating with suppliers and partners. Decathlon has also implemented RFID technology to improve inventory management and enhance the customer experience. The company can implement several other technologies such as artificial intelligence, blockchain, augmented reality, and virtual reality to optimize its supply chain operations and improve its customer experience.

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These interpretations are commonly used in various fields, including statistics, signal processing, and machine learning, particularly in the context of state estimation and prediction using techniques such as Kalman filters or Hidden Markov Models.

The correct interpretations are as follows:

The interpretation of mt is: The expected value of the hidden state at time t given the observations up to time t. This means that mt represents the best estimate of the underlying or hidden state of the system at time t based on all the available observations up to that point.

The interpretation of at is: The expected value of the hidden state at time t given the observations up to time t - 1. This means that at represents the best estimate of the hidden state at time t based on the observations up to the previous time step, t - 1. It does not take into account the latest observation at time t.

The interpretation of ft is: The expected value of the observation at time t given the observations up to time t - 1. This means that ft represents the predicted or expected value of the observation at time t based on the observations up to the previous time step, t - 1. It provides an estimate of what the observation is likely to be at the current time step.

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Stretching refers to expanding the product or service offering to target a broader customer base, typically by introducing variations or extensions of the existing product or service.

Stretching and filling, with respect to products/services:

Stretching refers to expanding the product or service offering to target a broader customer base, typically by introducing variations or extensions of the existing product or service. Filling, on the other hand, involves adding more options or variations within a specific product or service category to cater to different customer preferences.

Stretching aims to reach new market segments by offering products or services that are slightly different from the existing ones but still aligned with the company's core competencies. This strategy allows the company to tap into new customer needs and increase its market share. Filling, on the other hand, focuses on providing more options or variations within a particular product or service category to cater to diverse customer preferences and increase customer satisfaction.

Differences between primary and secondary data used for research and their benefits:

Primary data: Primary data is collected directly by the researcher through surveys, interviews, observations, or experiments. It is tailored to the specific research objectives, providing relevant and specific information. Primary data allows researchers to control the data collection process, ensuring the accuracy and reliability of the information.

Secondary data: Secondary data is collected by others for purposes other than the current research. It can be obtained from various sources, such as government agencies, research institutions, industry reports, and published studies.

Differences between corporate, contractual, and administered vertical marketing:

Corporate vertical marketing: In this approach, a single entity, typically a manufacturer or producer, owns and controls all levels of the distribution channel. This includes manufacturing, wholesaling, and retailing.

Contractual vertical marketing: This approach involves legally binding agreements between independent entities at different levels of the distribution channel. These agreements define the rights, responsibilities, and obligations of each party.

Administered vertical marketing: In this approach, coordination in the distribution channel is achieved through the dominant channel member's power and influence. The dominant member, typically a manufacturer or a large retailer, sets the terms, conditions, and policies that other channel members must follow.

Elements of an integrated marketing communications system:

Direct answer: The elements of an integrated marketing communications system include advertising, sales promotion, public relations, personal selling, direct marketing, and digital marketing. These elements work together to deliver a consistent and coordinated message to target audiences.

Advertising: Advertising involves paid, non-personal communication through various media channels to promote a product, service, or brand. It can include television commercials, print ads, online banners, and social media ads.

Sales promotion: Sales promotion activities aim to stimulate immediate sales or encourage customer engagement. Examples include discounts, coupons, contests, giveaways, and loyalty programs.

Public relations: Public relations activities focus on building and maintaining a positive public image and managing relationships with various stakeholders. This includes media relations, press releases, events, sponsorships, and corporate social responsibility initiatives.

Personal selling: Personal selling involves face-to-face communication between a salesperson and a potential customer. It allows for personalized interaction, relationship building, and addressing customer needs and concerns.

Direct marketing: Direct marketing involves reaching out to target customers directly, often through mail, email, telemarketing, or text messages. It allows for personalized messaging and direct response from customers.

Digital marketing: Digital marketing encompasses various online marketing channels, including websites, search engine optimization, social media marketing, content marketing, email marketing, and online advertising.

Integrated marketing communications combines multiple elements, such as advertising, sales promotion, public relations, personal selling, direct marketing, and digital marketing, to create a cohesive and synchronized communication strategy. By utilizing these elements effectively, companies can deliver a consistent message across different channels and engage with their target audiences more effectively.

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a. To estimate the unemployment rates in the fourth quarter of 1975 and the first quarter of 1976 using a 3-period moving average, we take the average of the three most recent quarters for each period.

For the fourth quarter of 1975:

Moving average = (5.6 + 6.9 + 7.2) / 3 = 6.57

For the first quarter of 1976:

Moving average = (6.9 + 7.2 + 7.2) / 3 = 7.1

b. To estimate the unemployment rates in the fourth quarter of 1975 and the first quarter of 1976 using simple exponential smoothing with a smoothing factor (α) of 0.7, we use the formula:

Forecast = α * Actual + (1 - α) * Previous Forecast

For the fourth quarter of 1975:

Forecast = 0.7 * 7.2 + (1 - 0.7) * 6.99 = 7.13

For the first quarter of 1976:

Forecast = 0.7 * 7.2 + (1 - 0.7) * 7.13 = 7.16

c. To compare the accuracy of the forecasts using Mean Absolute Deviation (MAD) and Mean Squared Deviation (MSD), we calculate the deviations as follows:

For the 3-period moving average:

Deviation = |Actual - Forecast|

MAD = Sum of deviations / Number of periods

MSD = Sum of squared deviations / Number of periods

For the exponential smoothing forecast with α = 0.7:

Deviation = |Actual - Forecast|

MAD = Sum of deviations / Number of periods

MSD = Sum of squared deviations / Number of periods

We need the actual values for the fourth quarter of 1975 and the first quarter of 1976 to calculate the deviations and evaluate the accuracy of the forecasts.

Based on the MAD and MSD criteria, we can determine which method provides a more accurate forecast. Lower values of MAD and MSD indicate higher accuracy. The method with lower MAD and MSD would be suggested.

However, if the selected method (exponential smoothing with α = 0.7) is providing satisfactory accuracy, there may not be a need to change the parameters. The decision to change the parameters would depend on the evaluation of the forecast accuracy and the specific requirements of the forecasting situation.

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The forward discount rate that a customer will have to hit if they are a seller of AUD in a 3-month forward contract is approximately 0.7090.

To calculate the forward rate, we need to add the forward swap points to the spot rate. In this case, the spot rate is 0.7070/80 (USD/AUD), and the 3-month forward swap rate is 20/10.

The forward swap rate consists of two components: the forward points for the base currency (USD) and the forward points for the quote currency (AUD). Here, we are interested in the forward points for the AUD.

To calculate the forward rate, we need to subtract the AUD forward points from the spot rate. The AUD forward points can be obtained by dividing the forward swap rate by the quote currency (AUD) denominator, which is 10 in this case.

Forward points for AUD = 20 / 10 = 2

Now, subtracting the forward points from the spot rate:

Forward rate = Spot rate - Forward points for AUD

Forward rate = 0.7070 - 0.002 = 0.7050

The forward rate that a customer will have to hit if they are a seller of AUD in a 3-month forward contract is approximately 0.7090, which is closest to option c.

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