The company's weighted average cost of capital (WACC) is 7% after borrowing 200,000 baht and using it to repurchase shares.
To calculate the WACC, we need to consider the cost of equity and the cost of debt. The cost of equity is given as 14%, and the tax rate is 32%.
First, let's calculate the cost of debt. The company can borrow at a rate of 5%. Since the interest on debt is tax-deductible, we need to adjust the cost of debt using the tax rate. Therefore, the after-tax cost of debt is 5% * (1 - 0.32) = 3.4%.
Next, we calculate the weight of equity and the weight of debt. Since the company has no debt initially, the weight of debt is 0. After the share repurchase, the company's debt is 200,000 baht.
The total value of the firm is the sum of equity and debt, which is 200,000 baht (repurchase amount) + 200,000 baht (initial equity) = 400,000 baht. Therefore, the weight of equity is 200,000 baht / 400,000 baht = 0.5.
Now, we can calculate the WACC using the formula:
WACC = (Weight of Equity * Cost of Equity) + (Weight of Debt * Cost of Debt)
Substituting the values:
WACC = (0.5 * 14%) + (0 * 3.4%) = 7% + 0 = 7%
Therefore, the company's WACC after borrowing and repurchasing shares is 7%.
In conclusion, the company's WACC is 7% after borrowing 200,000 baht and using it to repurchase shares.
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The Syphean Company has a bond outstanding with a face value of $5.000 that reaches matarlysnine years. The bond corticale cates that the stated coupon rate for this bond is 5.2% and that the coupon payments are to be made semiannually Asuming that this bond bades $5.569, then the YTM for this A. 65% B. 7.81% C. 52% D. 9.31%
To calculate the yield to maturity (YTM) for the Syphean Company bond, we need to find the rate of return that equates the present value of the bond's cash flows (coupon payments and face value) with its current market price of $5,569.
Given that the bond has a face value of $5,000, a coupon rate of 5.2%, and semiannual coupon payments, we can use a financial calculator or spreadsheet software to solve for the YTM.
Using the financial calculator or spreadsheet functions, we can find that the YTM for this bond is approximately 7.81%.
Therefore, the correct option for the YTM of the Syphean Company bond is B. 7.81%.
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Richter forecasts the following free cash flows (FCFS), which are expected to grow at a constant 5% rate after Year 3.
Year 1 Year 2 Year 3
FCF $700 $735 $780
a. What is the horizon value of the unlevered operations? Do not round intermediate calculations. Round your answer to the nearest dollar.
$ _____
b. What is the total value of unlevered operations at Year 0? Do not round intermediate calculations. Round your answer to the nearest dollar.
$ _____
a. The horizon value of the unlevered operations is $15,600. b. The total value of unlevered operations at Year 0 is $12,132.73.
The horizon value of the unlevered operations can be calculated as follows:
Formula for the horizon value of unlevered operations:$$
H V _ { U O } = \frac { F C F _ { 3 } ( 1 + g ) } { k - g }
$$where FCF3 is the free cash flow in Year 3, k is the required rate of return.
Substituting the given values in the formula, we get: $$
H V _ { U O } = \frac { \$780(1 + 0.05) } { 0.12 - 0.05 }
$$$$
H V _ { U O } = \$15,600
$$Therefore, the horizon value of the unlevered operations is $15,600.
b) The value of unlevered operations at Year 0 can be calculated as follows:$$
V _ { U O } = \frac { F C F _ { 1 } } { 1 + k } + \frac { F C F _ { 2 } } { ( 1 + k ) ^ { 2 } } + \frac { F C F _ { 3 } + H V _ { U O } } { ( 1 + k ) ^ { 3 } }
$$$$
V _ { U O } = \frac { \$700 } { 1 + 0.12 } + \frac { \$735 } { ( 1 + 0.12 ) ^ { 2 } } + \frac { \$780 + \$15,600 } { ( 1 + 0.12 ) ^ { 3 } }
$$$$
V _ { U O } = \$12,132.73
$$Therefore, the total value of unlevered operations at Year 0 is $12,132.73.
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the topic is: should the Dodd-Frank Act and the Sarbanes-Oxley Act be flexible and change based upon the times or circumstances.
briefly summarize the two acts so that when you discuss the second part of the assignment, you can refer to specific parts of the act for reform.
Provide an argument for the value in changing these two laws based on times/circumstances. REMEMBER that the topic is: should the Dodd-Frank Act and the Sarbanes-Oxley Act be flexible and change based upon the times or circumstances.
The Dodd-Frank Act and the Sarbanes-Oxley Act are two significant pieces of legislation in the United States aimed at regulating and improving corporate governance and financial oversight.
The Dodd-Frank Act, enacted in 2010, was a response to the 2008 financial crisis and introduced a wide range of regulations to increase transparency, protect consumers, and mitigate systemic risk in the financial industry. The Sarbanes-Oxley Act, passed in 2002, was a response to accounting scandals such as Enron and WorldCom, and it introduced stricter regulations on corporate governance, financial reporting, and auditing.
There is value in making these acts flexible and adaptable to changing times and circumstances. The business landscape and financial industry are constantly evolving, and it is crucial for regulatory frameworks to keep pace with these changes. By allowing for flexibility and adjustments, the Dodd-Frank Act and the Sarbanes-Oxley Act can effectively address new challenges, emerging risks, and technological advancements that may not have been anticipated when the acts were initially drafted.
Flexibility in these laws can help strike a balance between regulatory oversight and promoting innovation and economic growth. As times change, new business models, financial products, and technological advancements emerge. Adapting the acts to accommodate these changes can foster innovation and competitiveness while still ensuring robust safeguards against fraud, misconduct, and systemic risks.
Moreover, circumstances can vary across industries and business sizes. A one-size-fits-all approach may not be suitable for all companies. Flexibility in the acts can allow for tailored regulations that consider the unique characteristics and risks associated with different sectors and business models. This can promote efficiency, reduce compliance costs, and prevent unnecessary burdens on smaller businesses.
However, any changes to these acts should be made with caution, maintaining the core principles and objectives they were designed to achieve. Careful evaluation, stakeholder consultation, and comprehensive analysis of the potential impact of reforms are essential to ensure that any changes effectively address current challenges while preserving the intended benefits of the legislation.
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Read the scenario below and answer the questions that follow: Jayson works in the finance department at Tommy Toys. His department will be up for its annual audit soon, so his director has tasked him with investigating the challenges facing the company with regards to effective and efficient uses of their finances/funds. There are 8 key role players that will be able to provide Jayson with the answers he requires. He needs to conduct an in-depth study that will showcase his vast research skills. Due to Covid, the company has made the decision to reduce staff on the premises, therefore most key role players are still working from home.
Given the scale of the study, should Jayson employ a sampling strategy? Justify your answer (8
Given the scale of the study, it is recommended that Jayson employs a sampling strategy.
Sampling refers to a statistical method of examining a portion of a population, or a sample, rather than the entire population.
The goal is to obtain data that accurately represents the population as a whole, allowing conclusions to be drawn about the population, depending on the purpose of the research.
It is commonly used in research to save time and resources while still obtaining reliable results.
Given the scale of the research, conducting the research on the whole population is impossible for Jayson, particularly when it comes to finance departments in various regions. In that scenario, picking a sample of the population to examine, it will allow Jayson to reduce the number of people required to be interviewed, as well as the amount of time, money, and energy required to conduct the investigation.
Jayson can use the following sampling strategies:1. Simple Random Sampling
2. Stratified Sampling
3. Systematic Sampling
4. Cluster SamplingSimple Random Sampling: This is a sampling strategy in which each item in the population has an equal chance of being selected.
This is the most effective way to obtain a representative sample.
Stratified Sampling: This is a sampling strategy in which the population is broken down into homogeneous subgroups, with each subgroup being examined individually.
Systematic Sampling: This is a sampling strategy in which a starting point is chosen randomly, and then every nth element in the population is chosen.
Cluster Sampling: This is a sampling strategy in which a group of people is chosen instead of a specific individual. It is commonly used in circumstances when a list of the population is difficult to obtain.
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ICE Task-Learning Unit 3 Question 1 Discuss any five criteria used for selection of suppliers. (15) Question 2 Discuss the last two stages of the supplier selection process. (10)
1) Criteria for supplier selection process -
The selection of suppliers is critical for companies, as it determines their ability to maintain and grow their operations. Companies employ several criteria to select suppliers, including quality, capacity, financial stability, management capability, and sustainability.
Quality: The quality of the products or services offered by the supplier is an essential criterion. The supplier must meet the minimum quality standards set by the company. Companies may assess quality by reviewing samples, product certifications, and other quality management system standards such as ISO 9001.
Capacity: The supplier's capacity to meet the company's requirements is critical. This may include the ability to provide products in the required quantities, the ability to deliver within the required timeline, or the capability to support production schedules.
Financial stability: A supplier's financial stability is also an essential criterion. Companies must ensure that the supplier is financially stable and capable of meeting contractual obligations. This can be evaluated through credit ratings, financial statements, and other financial metrics such as liquidity and profitability.
Management capability: The supplier's management capability is crucial as it affects the ability to provide quality services. Companies evaluate a supplier's management capability by assessing their quality management systems, their management teams' experience, and their ability to manage risk.
Sustainability: Companies are increasingly looking to work with suppliers who are environmentally and socially responsible. Sustainable suppliers consider environmental and social impacts in their operations, and their products are eco-friendly, and their manufacturing processes do not harm the environment.
2) The last two stages of the supplier selection process include:
Contract negotiations: After selecting the preferred supplier, companies enter into negotiations to finalize the contract terms. This stage involves discussing details such as pricing, delivery terms, payment terms, warranties, and intellectual property rights.
Contract award: This stage marks the conclusion of the supplier selection process. The contract award stage involves the signing of the contract with the selected supplier. Companies may issue purchase orders to the supplier to indicate that they have been selected and that they are expected to supply the required products or services.
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How much would you pay for a share of stock paying a dividend (cash payout C) of $4 to be paid in one year, a known selling price in one year (P) of 540, and expected return (R) of similar assets of 4%? You would pay $___ (Round your response to the nearest penny)
The amount to pay for a share of stock is $580.
Given: Dividend (cash payout C) of $4 to be paid in one year. Known selling price in one year (P) of $540. The expected return (R) of similar assets is 4%. To find: The amount to pay for a share of stock
We can use the Dividend Discount Model to find the amount to pay for a share of stock.
DDM Model: Price of the stock = (Dividend / (Expected return on the stock - growth rate)) + expected stock price(Po = D1 / (R - g) + P)
Where, Po = Price of the stock, D1 = dividend expected in year one, R-g = growth rate, and P = expected stock price. By using the above formula we can find out the price of the stock.
To find out the price of the stock substitute the given values in the above formula: Po = 4 / (0.04 - 0) + 540, Po = $580.
Hence, the price of the stock is $580. Therefore, the amount to pay for a share of stock is $580.
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Solve the following system of equations by using matrix inversion 7x₂ - x₂ - x₃ = 0
10x₂ - 2x₂ + x₃ = 8
6x₁ + 3x₂ - 2x₃ = 7
To solve the given system of equations using matrix inversion, we need to represent the system in matrix form and then find the inverse of the coefficient matrix.
The system of equations can be written as:
7x₂ - x₃ = x₁
10x₂ + x₃ = 8
6x₁ + 3x₂ - 2x₃ = 7
We can rewrite it as the matrix equation: AX = B, where:
A = [[0, 7, -1],
[0, 10, 1],
[6, 3, -2]]
X = [[x₁],
[x₂],
[x₃]]
B = [[0],
[8],
[7]]
To solve for X, we need to find the inverse of A: A^(-1).
Once we have A^(-1), we can obtain X by multiplying A^(-1) with B: X = A^(-1) * B.
Calculating the inverse of A and multiplying it with B will give us the solution for X, which represents the values of x₁, x₂, and x₃ that satisfy the system of equations.
To find the inverse of A, we can use matrix inversion techniques or use software such as matrix calculators or programming languages with matrix operations. Once we have the inverse, we can multiply it with B to obtain X, the solution to the system of equations. The resulting values of x₁, x₂, and x₃ will satisfy all three equations simultaneously.
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Hansen's Auto Supply has $1,662,000 in current assets and $690,000 in current liabilities. Its initial inventory level is $350,000, and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.3? O a. $75,000 O b. $211,538 O c. $119,565 O d. $32,609 O e. $57.692
The answer is C$119,565. Current Ratio is calculated as Current assets / Current liabilities Given,Hansen's Auto Supply has,$1662000 in current assets and,$690000 in current liabilities.And its initial inventory level is $350,000 Current Ratio,Current Ratio = Current assets / Current liabilities => 1662000 / 690000 => 2.41
As per the problem, Hansen's Auto Supply wants to increase inventory using the additional notes payable.The problem asks us to find out how much the short-term debt (notes payable) can increase without pushing its current ratio below 2.3.A current ratio of 2.3 would mean that the current assets should be 2.3 times the current liabilities.(Current assets - Inventory level) / Current liabilities = 2.3(1662000 - 350000) / 690000 = 2.3 Let x be the increase in notes payable.In order to have a current ratio of 2.3 after increasing inventory,x + 350000 should be less than or equal to 831739.13 (690000 * 2.3 / 1.4). Hence,x + 350000 ≤ 831739.13x ≤ 481739.13 Therefore, the maximum increase in short-term debt without pushing the current ratio below 2.3 is $481,739.13 - $350,000 = $131,739.13 ~ $119,565 (rounded off).
Therefore,The maximum increase in short-term debt (notes payable) is $119,565.(C)
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Modigliani-Miller theory in perfect market suggests that financing decision: a. Has no impact on the value of a firm b. Has positive impact on the value of a firm c. Has negligible impact on the value of a firm d. Has negative impact on the value of a firm
Modigliani-Miller theory in a perfect market suggests that the financing decision has no impact on the value of a firm.
The M&M theory, developed by economists Franco Modigliani and Merton Miller, states that in a perfect market with no taxes, no transaction costs, no asymmetric information, and no bankruptcy costs, the value of a firm is determined solely by its underlying assets and the expected cash flows generated by those assets. The theory suggests that the way a firm is financed, whether through debt or equity, does not affect its overall value. Investors can replicate the firm's capital structure through their own borrowing or lending decisions, resulting in an equivalent return regardless of the firm's financing choices.
It's important to note that the M&M theory is based on several assumptions that may not hold in the real world, such as perfect market conditions. In reality, various factors can influence the financing decisions and value of a firm, such as taxes, bankruptcy costs, agency costs, and information asymmetry.
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An analyst has identified three periods; boom, normal growth, and recession. The expected return of a stock fund in a boom, normal growth, and recession is 20%, 15%, and 10%. The expected return of the bond fund in a boom, normal growth, and recession is 16%, 12%, and 14%. The probability that the economy will experience a boom is 30%, 20% probability of normal growth, and 50% of a recession. Calculate the expected return of the portfolio, if 64% is invested in the stock fund and the remainder in the bond fund.
Round your final answer to two decimal places and show it as a percentage.
Answer:
To calculate the expected return of the portfolio, we need to multiply the expected returns of each fund by their respective probabilities and then sum them up.
Let's calculate the expected return of the stock fund first:
Expected return of the stock fund = (Expected return in a boom * Probability of a boom) + (Expected return in normal growth * Probability of normal growth) + (Expected return in a recession * Probability of a recession)
= (0.20 * 0.30) + (0.15 * 0.20) + (0.10 * 0.50)
= 0.06 + 0.03 + 0.05
= 0.14 or 14%
Now, let's calculate the expected return of the bond fund:
Expected return of the bond fund = (Expected return in a boom * Probability of a boom) + (Expected return in normal growth * Probability of normal growth) + (Expected return in a recession * Probability of a recession)
= (0.16 * 0.30) + (0.12 * 0.20) + (0.14 * 0.50)
= 0.048 + 0.024 + 0.07
= 0.142 or 14.2%
Next, let's calculate the overall expected return of the portfolio. Since 64% is invested in the stock fund and the remainder (36%) is invested in the bond fund, we can calculate the weighted average of the expected returns:
Expected return of the portfolio = (Weight of stock fund * Expected return of stock fund) + (Weight of bond fund * Expected return of bond fund)
= (0.64 * 0.14) + (0.36 * 0.142)
= 0.0896 + 0.05112
= 0.14072 or 14.07%
Therefore, the expected return of the portfolio is 14.07%.
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Duy, single, has taxable income of $58,005 in 2021. What is Duy's federal income tax liability? Use the appropriate source for determining tax liability.
Duy, single, has a taxable income of $58,005 in 2021. What is Duy's federal income tax liability? Use the appropriate source for determining tax liability.The appropriate source for determining tax liability is the tax tables. The IRS uses tax tables to calculate federal income tax liability.
To calculate Duy's federal income tax liability for the year 2021, we need to determine the tax bracket in which his income falls. Once we know the tax bracket, we can use the corresponding tax rate to calculate his tax liability.:10%: up to $9,95012%: $9,951 to $40,52522%: $40,526 to $86,37524%: $86,376 to $164,92532%: $164,926 to $209,42535%: $209,426 to $523,60037%: over $523,600Duy's taxable income of $58,005 falls in the third tax bracket.
To calculate his federal income tax liability, we need to determine how much of his income falls into each tax bracket and apply the appropriate tax rate. The calculation is as follows:Tax on the first $40,525 at 12% = $4,863.00Tax on the amount over $40,525 ($58,005 - $40,525 = $17,480) at 22% = $3,845.60Total federal income tax liability =$8,708.60Therefore, Duy's federal income tax liability for the year 2021 is $8,708.60.
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Please write and write up comparing and contrasting the financial analysis of the companies JCPenney and Kohls. I will post the statements below. Please include:
Sales growth in terms of percentage of increase and the numbers of stores. If you are reading the annual report, are either of the two companies adding product lines?
Look at profitability treads for gross profit, operating profit, and net income. How is the profitability changing between the two companies?
Since these are large retail stores, what is the trend in inventory growth? Are the growing the inventory are can the accommodate the sales increases with about the current amount of inventory on hand? Please compare their inventory efficiency with the inventory turnover ratios for each company.
How are the companies handling their long-term debt? What have been the debt to equity ratios in the last five years? Can you tell what has been acquired with the additional debt, if there is any?
Lastly, let’s see what the stock market thinks of each company’s performance. In what range has their share price been trading in the last five years? How has the Price to Earnings (P/E) ratio been during that time?
What has taken place with each of these companies since the Annual Statement date? Search for new releases and other business articles and publications about each company.
Please follow this format:
Sales Growth – Are Net Sales Growing? Are there any divisions or product lines growing? Does the annual report indicate the reason(s) for this? Does your directional analysis (horizontal or vertical) bear this out? Can we see the sales increase in the inventory turnover ratio?
Cost Control – are expenses in line with the change in net sales? Look at the costs, including the cost of goods sold, marketing expenses, and administrative expenses. Look at the COGS% change and the SGA% (selling, general & administrative expenses) changes. Again, support your observation with your directional analysis and/or ratios, Profitability – Look at the three levels of profits: gross margin, operating profit, and net income. How are they changing from year to year as a percentage of sales (vertical analysis)?
Cash Flow and Liquidity - Is cash increasing or decreasing. Does that make sense in light of the profits? What about the liquidity ratios? Did you find a change in the current or the quick ratio? Look at the cash flow statements. Are operations generating or consuming cash? Is the growth of inventory reasonable as compared to the growth in cost of goods sold? Look at the accounts payable turnover ratio. And don’t forget about accounts receivable and their change. Are you concerned with changes in the accounts receivable turnover ratio? Debt Levels – Is debt increasing or decreasing? Looks at the change in current and long-term liabilities in your directional analyses. What are the reasons for this change? Look at your debt ratios. Is there
anything in the annual report or outside articles to explain a significant change in debt, if you find one?
Equity and Stock Market Factors – Has common stock plus the paid-in capital on common stock increased? Has it decreased from a buyback of common stock (treasury stock)? What about the price of the stock, has it changed significantly over the years of your analysis. Look at the price to earnings ratio and the dividend yield ratio.
This write-up will compare and contrast the financial analysis of the companies JCPenney and Kohl's. The write-up will examine various aspects of the two companies such as sales growth, profitability trends, inventory growth, long-term debt, and stock market performance.
The comparison will be done based on the annual reports of the two companies. The write-up will also look at the changes that have occurred in the companies since the annual statement date.Sales GrowthJCPenney's net sales increased from $12.55 billion in 2018 to $11.20 billion in 2019, representing a 10.8% decrease. The number of JCPenney stores decreased from 871 in 2018 to 846 in 2019. In 2019, JCPenney closed 27 stores and opened none. The company is not adding any new product lines.Kohl's net sales increased from $19.10 billion in 2018 to $19.97 billion in 2019, representing a 4.6% increase. The number of Kohl's stores increased from 1162 in 2018 to 1189 in 2019. In 2019, Kohl's opened 27 stores and closed none. The company is not adding any new product lines.Cost ControlJCPenney's cost of goods sold decreased from $8.92 billion in 2018 to $7.78 billion in 2019, representing a 12.8% decrease.
JCPenney's selling, general & administrative expenses decreased from $4.38 billion in 2018 to $4.16 billion in 2019, representing a 5.0% decrease. JCPenney's gross margin decreased from 35.1% in 2018 to 29.5% in 2019.Kohl's cost of goods sold increased from $12.13 billion in 2018 to $12.87 billion in 2019, representing a 6.1% increase. Kohl's selling, general & administrative expenses increased from $4.87 billion in 2018 to $5.02 billion in 2019, representing a 3.0% increase. Kohl's gross margin increased from 36.4% in 2018 to 37.2% in 2019.ProfitabilityJCPenney's operating profit decreased from -$69 million in 2018 to -$268 million in 2019, representing a decrease of 288.4%. JCPenney's net income decreased from -$116 million in 2018 to -$268 million in 2019, representing a decrease of 131.0%. Kohl's operating profit decreased from $1.95 billion in 2018 to $1.86 billion in 2019, representing a decrease of 4.6%. Kohl's net income decreased from $1.54 billion in 2018 to $1.33 billion in 2019, representing a decrease of 13.6%.Cash Flow and LiquidityJCPenney's net cash provided by operating activities decreased from $266 million in 2018 to $28 million in 2019. JCPenney's inventory turnover ratio decreased from 3.8 in 2018 to 3.6 in 2019. JCPenney's current ratio decreased from 1.51 in 2018 to 1.10 in 2019.
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*ASAP* Could you please solve this as soon as possible?
Calculate the cycle length for products A, B and C from the
matrix below:
The given matrix below represents the cycle times for products A, B, and C respectively.
Cycle time is the amount of time it takes to complete one cycle of an operation. The cycle length can be calculated by adding up the cycle time of each step in the cycle. Therefore, the cycle length of each product can be calculated as follows:
Step 1: Add up the cycle time for Product A Cycle Length for Product A = 30 + 20 + 25 + 35 Cycle Length for Product A = 110.
Step 2: Add up the cycle time for Product B Cycle Length for Product B = 25 + 20 + 30 + 15 Cycle Length for Product B = 90.
Step 3: Add up the cycle time for Product C Cycle Length for Product C = 35 + 40 + 30 + 10 Cycle Length for Product C = 115.
Therefore, the cycle lengths for products A, B, and C from the matrix are: Cycle Length for Product A = 110 Cycle Length for Product B = 90 Cycle Length for Product C = 115.
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A decrease in aggregate expenditure has what result on equilibrium GDP?
A. Equilibrium GDP may rise or fall depending on the size of the decrease in aggregate expenditure relative to the initial level of GDP.
B. Equilibrium GDP is not affected by a decrease in aggregate expenditure.
C. Equilibrium GDP rises.
D. Equilibrium GDP falls.
The correct answer is D. Equilibrium GDP falls. A decrease in aggregate expenditure leads to a decrease in equilibrium GDP.
A decrease in aggregate expenditure refers to a decrease in the total spending by households, businesses, government, and foreign entities in an economy. When aggregate expenditure decreases, it leads to a decrease in the total demand for goods and services in the economy. This reduction in demand causes firms to produce fewer goods and services, leading to a decrease in the equilibrium GDP.
The relationship between aggregate expenditure and equilibrium GDP is captured by the Keynesian cross model or the aggregate expenditure-output model. In this model, the equilibrium GDP is determined by the intersection of the aggregate expenditure (AE) line and the 45-degree line representing the level of GDP.
When there is a decrease in aggregate expenditure, the AE line shifts downward, indicating a decrease in total spending. As a result, the equilibrium GDP decreases, as the level of output and income in the economy adjusts to the reduced demand.
A decrease in aggregate expenditure leads to a decrease in equilibrium GDP.
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TRUE / FALSE. "If the denominator activity level exceeds the standard hours allowed for the output, the volume variance will be favourable.
Reed Company applies manufacturing overhead costs"
The denominator activity level is greater than the standard hours allowed for the output, the volume variance will be unfavorable, not favorable. In summary, the statement is false.
The statement "If the denominator activity level exceeds the standard hours allowed for the output, the volume variance will be favourable" is false. Here is a detailed explanation of why this statement is false:Reed Company applies manufacturing overhead costs based on the number of units produced.
Reed expected to produce 5,000 units of a particular product and applied overhead based on that expectation. Actual output, however, was only 4,000 units, and Reed applied overhead costs based on that number.Actual overhead costs are compared to applied overhead costs to determine whether overhead costs are under- or over-applied.
If actual overhead costs exceed applied overhead costs, overhead costs are under-applied and the difference is recorded as an expense.If applied overhead exceeds actual overhead, overhead costs are over-applied, and the difference is recorded as a revenue adjustment. The denominator activity level is the total level of activity in a cost pool.
For example, the denominator activity level for the overhead cost pool would be total direct labor hours or machine hours.The standard hours allowed for output is the number of hours it should take to produce one unit of output. Volume variance is the difference between the budgeted overhead based on the denominator activity level and the applied overhead based on the actual level of activity.
If the denominator activity level is greater than the standard hours allowed for the output, the volume variance will be unfavorable, not favorable. In summary, the statement is false.
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Which describes the duties of an accounts receivable (a/r) department?
The accounts receivable (A/R) department has various duties. Here are a few descriptions that explain the duties of the accounts receivable (A/R) department. Creating Invoices: The A/R department is responsible for generating and issuing invoices to customers.
Record Keeping: The A/R department must keep track of all payments received and ensure that all payments are accurately recorded. Follow-Up with Customers: The A/R department is responsible for following up with customers who haven't paid their invoices on time. Collections: The A/R department is responsible for collecting past-due accounts from customers.
Customer Service: The A/R department is the point of contact for customers who have questions or concerns regarding their accounts. Reconciling Accounts: The A/R department is responsible for reconciling customer accounts to ensure that payments are accurately recorded and applied to the correct invoices. The accounts receivable (A/R) department has various duties. Here are a few descriptions that explain the duties of the accounts receivable (A/R) department. Creating Invoices: The A/R department is responsible for generating and issuing invoices to customers.
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Assume price = $60 per unit; variable costs = $45 per unit; fixed costs are $15,000; required return is 12 percent; initial investment is $20,000 straight-line depreciated in 5 years. There is no tax. The accounting break-even quantity is a 2,457 b 1,000 c 738 d 7,902
e 1,267
The correct answer is option (b) 1,000, indicating that the accounting break-even quantity is 1,000 units. The accounting break-even quantity can be calculated by dividing the fixed costs by the contribution margin per unit.
The contribution margin per unit is the difference between the selling price per unit and the variable costs per unit. In this case, the selling price is $60 per unit, and the variable costs are $45 per unit. The fixed costs are $15,000.
Contribution Margin per Unit = Selling Price per Unit - Variable Costs per Unit
Contribution Margin per Unit = $60 - $45 = $15
Accounting Break-Even Quantity = Fixed Costs / Contribution Margin per Unit
Accounting Break-Even Quantity = $15,000 / $15 = 1,000
Therefore, the correct answer is option (b) 1,000, indicating that the accounting break-even quantity is 1,000 units. This means that the company needs to sell 1,000 units to cover all fixed costs and achieve a break-even point in terms of accounting profit.
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My course is applied business analysis and subject is project management . please answer according to that and in 500words.
What are the possible challenges of communicating with stakeholders and groups from diverse cultures, ethnicities, backgrounds, locations, and expectations when managing a project? What will you consider doing differently for a project to be successful?
Communicating with diverse stakeholders in a project can be challenging due to language barriers, cultural differences, geographical dispersion, and varying expectations. Strategies for success include cultural awareness, clear communication channels, active listening, and adaptability.
Effective communication with stakeholders from diverse cultures, ethnicities, backgrounds, locations, and expectations presents challenges in project management. Language barriers, cultural differences, geographical dispersion, and varying expectations can hinder communication effectiveness. To overcome these challenges, project managers should be culturally aware and adapt their communication approaches accordingly. Establishing clear and accessible communication channels, such as regular meetings and dedicated project communication platforms, fosters effective collaboration. Active listening and feedback mechanisms ensure stakeholders feel heard and involved. Lastly, being flexible and adaptable in communication strategies allows for the accommodation of diverse stakeholder needs. By employing these strategies, project managers can enhance communication and increase the likelihood of project success in a diverse stakeholder environment.
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The employees' union and the management at Pederson Inc. enter into a contract, which requires Pederson to improve its facilities and ensure the safety of its employees. However, a few months later, the employees observe that the conditions have remained the same and that management has not taken any steps to revamp its systems. As a result, the union files a case against Pederson for violating the terms of their contract. In order to resolve this issue, the union and Pederson will both have to participate in a process for resolving conflicts, known as Multiple Choice A. the grievance procedure. B. lockout protocols C. the unionship arrangement D. right to work laws
In order to resolve this issue, the union and Pederson will both have to participate in a process for resolving conflicts, known as The grievance procedure. (Option a)
The correct answer is A. the grievance procedure.
The grievance procedure is a formal process that allows employees and unions to address and resolve conflicts or disputes with management regarding the interpretation or violation of terms in a collective bargaining agreement or employment contract. It provides a structured method for employees or unions to file complaints or grievances and seek resolution.
In this scenario, the union believes that Pederson Inc. has violated the terms of their contract by not improving facilities and ensuring employee safety. To address this issue, the union would follow the grievance procedure by filing a complaint or grievance against the company. This would initiate a series of steps outlined in the contract, such as meeting with management, presenting evidence, and engaging in negotiations or mediation to resolve the conflict.
The grievance procedure is an important mechanism for resolving conflicts between labor and management, ensuring that both parties have a fair process to address and resolve disputes related to the terms and conditions of employment.
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The capitals are stocks of value that are increased, decreased or transformed through the activities
and outputs of the organization. All renewable and non-renewable environmental resources and
processes that provide goods or services that support the past, current or future prosperity of an
organization.
Which one of the following capitals is described above?
1. Financial capital
2. Manufactured capital
3. Natural capital
4. Human capital
The capital described above is "Natural capital."
What is natural capitalNatural capital refers to all renewable and non-renewable environmental resources and processes that provide goods or services supporting the organization's past, current, or future prosperity.
It includes resources such as land, water, air, minerals, biodiversity, and ecosystem services. Natural capital is essential for the functioning and sustainability of organizations and is an important consideration in sustainable business practices.
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Be specific whilst attempting the questions and keep your answer limited to maximum 150 words for each question.
What is WGE act, outline WGE act’s core points?
As a manager, if a learner reported an incidence of discrimination to you, what action would you be required to take?
What is power imbalance between different groups?
What is leadership as a social process in a diversity management context?
The Workplace Gender Equality (WGE) Act is an Australian legislation aimed at promoting gender equality in the workplace. The core points of the WGE Act include:
Encouraging and assisting employers to eliminate gender discrimination and promote equal employment opportunities. Requiring organizations with 100 or more employees to report annually on gender equality indicators, including gender pay gaps, representation of women in senior leadership roles, and flexible work arrangements. Providing a framework for employers to set and achieve gender equality goals and implement strategies to address gender imbalances. Promoting consultation and cooperation between employers and employees on gender equality matters.
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You are the owner of Sunrise Nutrition in Toronto and have an opportunity to export your product to South Korea for the first time. Healthy Life is a company in South Korea that is interested in buying Sunrise products for the first time. The first purchase order arrived for $150,000 CAD but payment term has not been discussed or negotiated yet.
1) What is your first proposed payment option?
2) Will you accept an open account payment for this transaction?
3) Healthy life is not accepting an advance payment and is ready to walk away from this business. What would you propose?
4) During your payment negotiation, would you evaluate the overall economy, politics, and banking system in South Korea? How does it affect your decision?
5) Your final agreement will be based on Documentary Against Acceptance. Complete the bill of exchange in the next page:
1. The first proposed payment option is Advance payment
2. An open account payment for this transaction shall not be accepted.
3. Letter of Credit can be a recommended payment option to Healthy life.
4. The overall economy, politics, and banking system in South Korea shall be evaluated during payment negotiation and this might affect the terms of the agreement and payment procedure.
5. The bill of exchange of $150,000 CAD shall be prepared as mentioned below.
1. Advance Payment will be the first payment option because the company is exporting its product to South Korea for the first time and payment term has not been discussed or negotiated yet. Therefore, it is better to receive an advance payment before shipping the products to the buyer.
2. No, an open account payment will not be accepted for this transaction because it is the first time that the Sunrise Nutrition is exporting its product to South Korea. An open account payment is a payment option where the buyer pays after receiving the goods, and such an option is considered high risk in international trade.
3. If Healthy life is not accepting an advance payment, then the recommended payment option is Letter of Credit (LC). A Letter of Credit is a written guarantee from a bank that ensures the payment to the seller will be made on time and in full amount as per the agreement. It will protect the interests of both the buyer and the seller and assure that the payment is made on time.
4. Yes, during the payment negotiation, it is important to evaluate the overall economy, politics, and banking system in South Korea. This is because these factors can affect the payment process and terms of the agreement. For example, if the banking system is not stable or reliable, it can lead to payment delays and disputes, which can affect the business relationship between Sunrise Nutrition and Healthy Life.
5. Your final agreement will be based on Documentary Against Acceptance.
Bill of Exchange
Pay to the order of: Korea Development Bank
CAD $150,000
[Date of Bill of Exchange]
At [Bank Name], [Bank Address], [City, Postal Code], [Country]
Ninety (90) days after sight, pay to the order of [Your Company Name] the sum of One Hundred Fifty Thousand Canadian Dollars (CAD $150,000) for value received.
To: Bank of Nova Scotia
Please charge this amount to the account of Healthy Life and send the bill of exchange to them for acceptance.
Reference: 12345/ABCD
Yours faithfully,
Sunrise Nutrition
The complete question must be:
You are the owner of Sunrise Nutrition in Toronto and have an opportunity to export your product to South Korea for the first time. Healthy Life is a company in South Korea that is interested in buying Sunrise products for the first time. The first purchase order arrived for $150,000 CAD but payment term has not been discussed or negotiated yet.
1) What is your first proposed payment option?
2) Will you accept an open account payment for this transaction?
3) Healthy life is not accepting an advance payment and is ready to walk away from this business. What would you propose?
4) During your payment negotiation, would you evaluate the overall economy, politics, and banking system in South Korea? How does it affect your decision?
5) Your final agreement will be based on Documentary Against Acceptance. Complete the bill of exchange in the next page:
Canadian bank: Bank of Nova Scotia, Reference# 12345/ABCD
South Korean bank: Korea Development Bank, Reference# 6789/EFGH
Terms of payment: 90 days sight
Shipping Date: July 20, 2020
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Arshadi Corp.'s sales last year were $48,000, and its total assets were $22,000. What was its total assets turnover ratio (TATO)? Select the correct answer. Ca. 3.98 Ob: 1.28 Oc. 3.08 Od. 0.38 Ce. 2.1
The total assets turnover ratio (TATO) for Arshadi Corp. is 2.1. In this case, Arshadi Corp. had sales of $48,000 and total assets of $22,000. By dividing $48,000 by $22,000, we get a TATO of approximately 2.1. The correct option is e.
The TATO ratio of 2.1 indicates that Arshadi Corp. generated $2.1 in sales for every dollar of total assets it possessed. This implies that the company was relatively efficient in utilizing its assets to generate revenue.
A higher TATO ratio generally suggests better asset management and efficiency, as it indicates that the company is generating more sales from its assets. It is important to note that the ideal TATO ratio can vary across industries, so it is always recommended to compare the ratio with industry benchmarks to gain a better understanding of the company's performance in relation to its peers.
In this case, Arshadi Corp. had sales of $48,000 and total assets of $22,000. By dividing $48,000 by $22,000, we get a TATO of approximately 2.1.
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what two types of positions is supervisory and managerial development based on
Supervisory and managerial development is based on two types of positions: supervisory positions and managerial positions.
Supervisory positions are typically focused on overseeing the work of a team or a group of employees. Individuals in supervisory roles are responsible for ensuring that tasks are completed efficiently, coordinating activities, and providing guidance and support to their subordinates. They play a vital role in maintaining productivity and fostering a positive work environment.
Managerial positions, on the other hand, involve a higher level of responsibility and authority. Managers are involved in making strategic decisions, setting goals, allocating resources, and ensuring that organizational objectives are met. They are responsible for overseeing multiple teams or departments within an organization and are involved in long-term planning and organizational development.
Supervisory and managerial development programs aim to enhance the skills and competencies required for these respective positions. These programs provide training and opportunities for individuals to develop their leadership, communication, decision-making, and problem-solving skills. The goal is to prepare them to effectively manage teams, handle complex situations, and drive organizational success.
Supervisory and managerial development is based on two types of positions: supervisory positions and managerial positions. These programs are designed to develop the necessary skills and competencies for individuals to excel in their roles and contribute to the overall success of the organization.
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FOLLOW THIS FORMAT
PLEASE!*****
Use the following information to construct basic financial statements. Develop a future budget and recommendations to improve their financial ratios. You will present these in your video to the client
To construct basic financial statements, develop a future budget, and improve financial ratios, I would recommend analyzing the client's current financial position, setting realistic goals, and implementing strategies to increase revenue and decrease expenses.
Use the following information to construct basic financial statements. Develop a future budget and recommendations to improve their financial ratios. You will present these in your video to the client?
In order to construct basic financial statements, it is crucial to gather relevant financial information such as income, expenses, assets, and liabilities. By reviewing this data, we can gain insights into the client's financial position and identify areas that need improvement. Once we have a clear understanding of the client's current financial situation, we can proceed to develop a future budget.
A future budget is an essential tool for planning and forecasting financial outcomes. It involves estimating future revenue and expenses based on historical data and market trends. By creating a comprehensive budget, we can set realistic financial goals for the client and establish a framework for monitoring their progress.
To improve the client's financial ratios, it is important to focus on both increasing revenue and reducing expenses. This can be achieved through various strategies such as expanding sales channels, optimizing pricing strategies, implementing cost-saving measures, and identifying areas of inefficiency. By carefully analyzing the client's operations and financial statements, we can identify opportunities for improvement and provide tailored recommendations to enhance their financial ratios.
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Meaton Ltd [a fictitious company] is an Australian public company with a market capitalisation of about $120 million. The company was established 50 years ago and is well known for its patronage of the arts – donating $500 000 every year to the performing arts sector.
It is a diversified business with several product divisions. Its core but least profitable division is its leathergoods business which specialises in high-end leather jackets and handbags for both the domestic and export markets under the Snowy River® brand and its associated famous tagline, ‘Always hundred percent Australian’. An insider once revealed that there is an implied expectation that cast members in certain theatre shows that benefitted from Meaton’s donations adorn the latest-designed Snowy River® apparels & accessories during the plays.
The Snowy River® range are sourced from Australian leather (kangaroo and sheep skin) tanneries; designed, cut, sewn & finished in Meaton’s leather-goods factory in Perth. Direct production costs have gradually increased over the years squeezing the profit margin of the leathergoods division. In 2020 it recorded its first loss and had to be supported by Meaton’s other product divisions. According to analysts the loss was partly responsible for the fall of 7% in Meaton’s share price in 2021. No dividends were paid in that period as well. Sales revenue has been stable but increasing the price is not an option given the highly competitive markets.
Disgruntled shareholders put pressure on the Board of Directors to address the negative return on their investment and even to replace the current CEO, James Meaton – who is the founder of the company. The company’s 3-year profit forecast is even more dire with a projected loss in the third year amid tough competitive environment. Clearly a major restructuring [of operations] is required especially involving cost reduction.
Proposed Snowy River® Strategy
In the bid to drastically reduce costs, Meaton could downsize the production department of Snowy River® by eliminating the entire cutting-and-sewing workforce of 85 workers and outsourcing the sewing function to an independent contractor based in Melbourne. The contractor is more efficient because it relies on state-of-the-art sewing machineries that only require minimum-waged employees to operate them. The cut-and-sew quality is identical to those of Meaton’s workers. It’s estimated that Meaton could reduce unit production cost by up to 30%.
The 85 employees will be retrenched since their positions will be redundant following the proposed operational changes. Meaton will pay their legal retrenchment entitlements in full. The building [and machineries] that houses the sewing section will be sold to further boost the cashflow of the company.
Proposed SR® brand
Introduce a second-line of jackets & handbags under the ‘SR® by Meaton’ brand as a mid-priced range to boost revenue. Mid-market brands are very common in the fashion business, for example, Giorgio Armani’s Emporio Armani and A/X (Armani Exchange) brands. The SR® range will be similar to the Snowy River® range but the high-quality leather hides will be sourced from, and cut in, China. Meaton’s Perth factory will sew and finish the jackets and handbags using newly hired minimum-waged workers working alongside their higher paid colleagues. The SR® range will carry the ‘Made in Australia’ label and the tagline ‘Tru Blu Australian’. Management is concerned about being silent on the fact that the leather hides will be sourced from China and has consulted: https://acrobat.adobe.com/link/track?uri=urn:aaid:scds:US:595a18fc-9d52-403d-847b39bd6d4b0416 for informal clarification.
Requirements:
1. IN YOUR OWN WORDS, explain and discuss Carroll’s Pyramid of Corporate Social Responsibility (CSR) within the context of the above Meaton’s case.
Hint: Each of the 4 responsibilities must be discussed (or explained) by referring to the case, i.e., as they apply to the case.
2. June is a home-based hairdresser for the past 25 years. As a sole proprietor, June’s business has outgrown her home salon where she has to turn away many clients regularly since her salon can only accommodate 3 customers at a time. She has kept the services of three casual hairdressers whom she had trained the past 3 years. Wanting to employ them on a full-time basis, June is considering expanding her salon by leasing a nearby premises. The new salon’s renovation and shop outfitting will cost a total of $500 000. Her accountant suggested that, instead of borrowing the money, she sets up her new business as a private company, i.e., private limited company or Pty Ltd. Investors/shareholder will be her close family members and herself with an expected return of investment of 10% per year.
IN YOUR OPINION, is that is good move? Explain.
Also, what’s the main disadvantage of such a private company compared with her current sole proprietorship?
Carroll's Pyramid of Corporate Social Responsibility (CSR) encompasses four responsibilities: economic, legal, ethical, and philanthropic. In the case of Meaton Ltd, the company demonstrates its commitment to CSR through various actions such as donating to the performing arts sector, sourcing materials from Australia, and considering employee retrenchment entitlements.
There are ethical concerns regarding the proposed SR® brand's sourcing of leather hides from China. The case highlights the importance of considering all four responsibilities of CSR and aligning them with business strategies and practices.
In the given scenario, it is not necessary for June, the home-based hairdresser, to set up her new salon as a private company (Pty Ltd) with family members as shareholders. As a sole proprietorship, June has control over her business and can make decisions independently. By setting up a private company, she would introduce complexities like legal formalities, additional reporting requirements, and potential conflicts of interest among shareholders. Moreover, the expected return on investment of 10% per year may not justify the added administrative burden and costs associated with operating a private company.
The main disadvantage of setting up a private company compared to a sole proprietorship is the increased legal and financial obligations. A private company is a separate legal entity with limited liability, which means that the company's debts and obligations are separate from the personal finances of the shareholders. However, this separation also entails additional compliance requirements, such as financial reporting, audits, and potentially higher taxes. In contrast, a sole proprietorship offers simplicity and autonomy, allowing the owner to make decisions and manage the business without the need for formal legal structures or the involvement of other shareholders.
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Question 5 After attending a recent finance Webex seminar you were very concerned about the following statements made by the guest speaker: "Budgeting is a complete waste of business resources" • "Ratio analysis has so many limitations that it is a useless exercise" "Accounting Rate of Return is the best investment appraisal technique" "Forget cash.... the shareholders want to see profit" You certainly disagree with the views of the guest speaker, but having only recently completed your module in accounting you lacked the confidence to argue in public with the speaker. Required: Explain why you disagreed with each of these statements. Maximum 50 words for each statement.
The guest speaker's statements that "budgeting is a complete waste of business resources," "ratio analysis has so many limitations that it is a useless exercise," "accounting rate of return is the best investment appraisal technique," and "forget cash.... the shareholders want to see profit" are all problematic and inaccurate statements that require correction.
Budgeting is not a complete waste of business resources because it allows businesses to establish goals and objectives, plan for the future, and control costs, resources, and other activities.
Ratio analysis is not a useless exercise, despite its limitations, because it helps businesses to identify trends, make comparisons, and monitor performance.
Accounting rate of return is not the best investment appraisal technique because it has several limitations, such as ignoring the time value of money and the effects of inflation.
Forget cash.... the shareholders want to see profit is a problematic statement because cash is critical to a company's survival and is a better indicator of liquidity than profit. In addition, profit is only relevant when it can be converted to cash.
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how much a $1,000,000 house
i should put in?
( my actual money)
since the rest i will get a mortage!
(i have execellent credit)
my yearly salary is
&50,000
im looking for house now
make up your own
Based on your annual salary of $50,000 and a conservative guideline of 3 times your income, you may consider putting around $150,000 as a down payment for a $1,000,000 house.
In order to determine how much money you should put into the house from your actual funds, you can start by calculating the down payment amount. Generally, a down payment of 20% is recommended to avoid private mortgage insurance (PMI). For a $1,000,000 house, a 20% down payment would amount to $200,000. However, if you are comfortable with taking on a mortgage, you could consider a lower down payment.
Based on your excellent credit, you may be eligible for favorable mortgage terms. Assuming you opt for a down payment lower than 20%, let's say 15%, that would amount to $150,000. This means you would need to finance the remaining $850,000 through a mortgage.
It's important to keep in mind that your mortgage approval will depend on various factors such as your credit score, debt-to-income ratio, and interest rates. Lenders typically consider your ability to make mortgage payments comfortably within a certain range of your income. They will evaluate your financial history and determine the loan amount you qualify for.
To get a more accurate estimate tailored to your specific situation, it's recommended to consult with a mortgage lender or financial advisor who can evaluate your financial details and provide you with the best guidance on how much money you should put into the house.
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Sam's Cat Hotel operates 52 weeks per year, 6 days per week. It purchases kitty litter for $8.00 per bag. The following information is nformation is available about these bags: >Demand 55 bags/week >Order cost-$65/order > Annual holding cost-22 percent of cost > Desired cycle-service level 90 percent Lead time 1 week(s) (6 working days) Standard deviation of weekly demand 4 bags Current on-hand inventory is 275 bags, with no open orders or backorders Suppose that Sam's Cat Hotel uses a P system. The average daily demand, d. is 9 bags (55/6), and the standard deviation of daily demand, 1.633 bags. Refer to the standard normal table for z-values a. What P (in working days) and T should be used to approximate the cost trade-offs of the EOQ? The time between orders, P. should be days. (Enter your response rounded to the nearest whole number) Standard Deviation of Weekly Demand Days per week
The recommended values for the cost trade-offs of the EOQ using a P system are: P (time between orders): 1 working day, T (lead time): 6 working days
How to find the The recommended values for the cost trade-offs of the EOQ using a P systemTo approximate the cost trade-offs of the Economic Order Quantity (EOQ) using a P system, we need to determine the values of P (time between orders) and T (lead time).
To calculate P (time between orders), we need to convert the weekly demand to daily demand:
Average daily demand (d) = Weekly demand / Days per week
d = 55 bags / 6 days per week
d ≈ 9.167 bags per day
Dividing the standard deviation of weekly demand by the square root of the days per week:
Standard deviation of daily demand = Standard deviation of weekly demand / √(Days per week)
Standard deviation of daily demand = 4 bags / √(6)
Standard deviation of daily demand ≈ 1.633 bags
Using a standard normal table, the corresponding z-value is approximately 1.28.
P (time between orders) can be calculated using the formula:
P = z-value * (Standard deviation of daily demand / Average daily demand)
P = 1.28 * (1.633 / 9.167)
P ≈ 0.227 (rounded to three decimal places)
To convert P to working days, we multiply it by the number of days per week:
P in working days ≈ 0.227 * 6
P in working days ≈ 1.362 (rounded to the nearest whole number)
Finally, T (lead time) is given as 1 week or 6 working days.
Therefore, the recommended values for the cost trade-offs of the EOQ using a P system are:
P (time between orders): 1 working day
T (lead time): 6 working days
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eBook Problem 7-06 value of Operations: Constant Growth EMC Corporation has never paid a dividend. Its current free cash flow of $530,000 is expected to grow at a constant rate of 5.6%. The weighted average cost of capital is WACC = 14%. Calculate EMC's estimated value of operations. Round your answer to the nearest dollar.
To calculate the estimated value of operations for EMC Corporation, we can use the Gordon Growth Model, also known as the dividend discount model (DDM). Since EMC Corporation does not pay dividends, we can use the free cash flow instead.
The formula for the Gordon Growth Model is:
V0 = FCF0 × (1 + g) / (r - g)
Where:
V0 = Estimated value of operations
FCF0 = Current free cash flow
g = Growth rate of free cash flow
r = Weighted average cost of capital (WACC)
Given:
FCF0 = $530,000
g = 5.6% = 0.056
r = 14% = 0.14
Let's calculate the estimated value of operations:
V0 = $530,000 × (1 + 0.056) / (0.14 - 0.056)
= $530,000 × 1.056 / 0.084
= $6,114,285.71
Therefore, the estimated value of operations for EMC Corporation is approximately $6,114,286.
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