a. The market structure in which Airbus and Boeing operate is an oligopoly. This is characterized by a small number of dominant firms that produce similar or differentiated products and have significant market power. Airbus and Boeing are the two main competitors in the global aircraft manufacturing industry, controlling a large share of the market. They are known for producing commercial airplanes used by airlines worldwide. These firms have a strong influence on market prices, engage in intense competition, and have the ability to affect market dynamics through their actions.
b. The market entry barriers that deter other firms from entering the aircraft manufacturing market include high capital requirements, significant research and development costs, and technological expertise needed to design and manufacture airplanes. Airbus and Boeing have established strong brand reputations, long-standing relationships with airlines, and extensive supply chains, which create additional barriers for new entrants. Additionally, strict safety regulations, certifications, and intellectual property protection further limit the entry of new competitors. These barriers make it challenging for potential rivals to enter the market and compete effectively against Airbus and Boeing.
Mutual interdependence refers to the relationship between Airbus and Boeing, where their actions and decisions are dependent on each other. Due to the limited number of competitors in the aircraft manufacturing industry, the actions of one firm directly impact the market position and strategies of the other. For example, when one company introduces a new aircraft model or lowers prices, the other firm must respond to remain competitive. This interdependence leads to a strategic interaction between Airbus and Boeing, where they constantly monitor and react to each other's moves in terms of product development, pricing, and market share. The competitive rivalry between the two firms is characterized by this mutual interdependence, as they closely observe and respond to each other's actions in order to maintain their market positions.
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SBW Goalposts Ltd leases a truck from the NZRU Bank so that it can deliver goalposts to its customers on 1 July 2015. Lease payments of $23,000 are required annually in advance for 5 years (payable 30 June), and a residual payment of $6,592 is required. The implicit interest rate in the lease is 10% p.a. The truck has a useful life of 10 years with a salvage value of $10,000. Required Record the necessary journal entries for SBW Goalposts on the following dates 1. 1 July 2015 2.30 June 2016 3. 30 June 2020 Edit View Insert Format Tools Table
July 1, 2015: Lease Receivable $103,455, Truck $103,455. To record the acquisition of the truck through a finance lease.
On July 1, 2015, SBW Goalposts Ltd acquired the truck through a finance lease from NZRU Bank. The journal entry records the initial recognition of the leased asset (Truck) and the corresponding liability (Lease Receivable) for the present value of lease payments ($23,000 x 4.1695) calculated using the implicit interest rate of 10%.
2. June 30, 2016:
Lease Receivable $23,000
Income Income $10,346
Truck $33,346
To record the annual lease payment and interest income.
On June 30, 2016, SBW Goalposts Ltd made the first annual lease payment of $23,000. The journal entry reduces the Lease Receivable by the payment amount and recognizes Interest Income based on the implicit interest rate applied to the Lease Receivable balance. The remaining balance is added to the Truck's carrying amount.
3. June 30, 2020:
Lease Receivable $23,000
Interest Income $5,819
Truck $28,819
To record the annual lease payment and interest income.
On June 30, 2020, SBW Goalposts Ltd made another annual lease payment of $23,000. The journal entry reduces the Lease Receivable by the payment amount and recognizes Interest Income based on the implicit interest rate applied to the Lease Receivable balance. The remaining balance is added to the Truck's carrying amount.
Note: The journal entries for subsequent years would follow a similar pattern of recording the lease payment, recognizing interest income, and adjusting the carrying amount of the Truck until the end of the lease term or when the residual payment is made.
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Explain how the clearing house operates to protect the futures market. Focus your answer on the daily re-settlement process.
A clearinghouse is an organization that acts as a mediator between counterparties in futures markets. The daily re-settlement process is one of the primary methods that the clearinghouse uses to protect the futures market.
What is this ?The following is a comprehensive explanation of how the clearinghouse operates to protect the futures market:DAILY RE-SETTLEMENT PROCESS: Every day, the clearinghouse examines the positions of every futures trader.
It determines how much each trader owes or is owed based on the current market price of the underlying commodity. The clearinghouse settles these accounts by requiring traders to deposit enough money in their margin accounts to cover any losses they may have incurred during the previous trading session.
By requiring traders to post margin, the clearinghouse ensures that traders have sufficient resources to meet their obligations. This helps to prevent situations where a trader is unable to fulfill their obligations, which could lead to defaults and create financial instability.
By requiring traders to deposit margin, the clearinghouse can effectively manage the risk of default, ensuring that the futures market remains stable and transparent.
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What is meant by sourcing continuum? [2 marks] b) A company (The Gulf Company) used to buy components from a Saudi supplier which had its price fixed throughout the years at $50 per component and has been reliable source. Now The Gulf Company has reduced its production due to lower demand and better work efficiency, thus has the capacity to make its own parts in- house which costs them $40 per component. It requires 300 parts per year and has set $25,000 in yearly investments. [8 Marks] i. Will it be better to buy the components or make them locally inhouse? ii. If another alternative Bahraini supplier is considered, which would cost them $50 to buy for the first 100 parts, and $45 for every other part ordered. Would it iii. be better to buy from them or stick to the old supplier or make them in-house? If the demand was increased to 2000 parts would your decision change or not? Give some guidelines and set of rules to follow in order to decide on the best iv. action or decision to make in the future.
The sourcing continuum is a wide spectrum that aids businesses in determining the most suitable supply method for their raw materials. The Gulf Company must assess all options, including in-house manufacturing, purchasing from the Saudi supplier, or sourcing from a Bahraini supplier.
A company needs to examine the sourcing continuum in order to make an informed decision about where to purchase or manufacture its raw materials or components. The Gulf Company has the following alternatives:i. In-house manufacturing costs $40 per component, while purchasing from a Saudi supplier costs $50 per component. As a result, in-house manufacturing will save the company $10 per component, and the company will be able to manufacture 300 components for $12,000.ii. If the company selects the Bahraini supplier, it will spend $50 for the first 100 components and $45 for each extra component. For 300 parts, the total cost would be $13,500, which is greater than the cost of in-house production and slightly less than the cost of buying from the Saudi supplier.
The firm must choose whether to continue buying from the Saudi supplier, move to in-house production, or use a Bahraini supplier based on the best option for them. If the demand is increased to 2000 components, in-house production will be the most cost-effective alternative. As a result, the Gulf Company should establish a set of rules and procedures to ensure that the most cost-effective alternative is used in the future.
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Monitoring micro-content consumption, ____________________ track
what users read, click upon and share on their social profiles.
Social retargeting
Display advertising
Site retargeting
Demographic tar
Monitoring micro-content consumption, Social retargeting can be used to track what users read, click upon and share on their social profiles. This is a method of targeting users who have previously interacted with a brand on social media.
By keeping an eye on user activity, businesses can get an idea of what content is resonating with their audience and use that information to improve their overall marketing strategy. It is a technique for running ads and content on social media channels that focus on a specific target audience that has previously interacted with your brand. Social retargeting is a powerful tool for businesses looking to engage their customers on social media. Display advertising is a form of online advertising that uses banner ads, pop-ups, and other graphical elements to attract attention and promote a product or service.
It is often used on websites, mobile apps, and social media platforms. Site retargeting is a method of displaying ads to people who have already visited a website. It is a way to keep a brand top of mind with people who have already shown an interest in their product or service. Demographic targeting is a method of reaching a specific audience based on their age, gender, income, education level, and other factors. It is often used in advertising to ensure that a message is being delivered to the right people at the right time.
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Establish long-range objectives and overall strategy or course of action by which a firm fulfills its mission, generally one year or longer, developed by highest managers
- take into account the organization's capabilities and resources, the changing business environment, and organizational objectives
A company's mission and long-term success largely depend on well-thought-out strategic planning, also known as setting long-range objectives and overall strategies.
What is the strategy?Strategic planning is crucial for a firm's success and mission fulfillment. Top managers' plans last 1+ years. Strategic planning considers capabilities, resources, environment, and objectives.
Key elements for long-term objectives and strategy include defining the organization's mission. Mission statement guides decision-making and strategy. Assessing internal capabilities and resources. Eval strengths, weaknesses, competencies, assets, and finances. Knowing these factors reveals competitive advantages and limitations.
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How should managers balance fairness (consistency of
disciplinary actions) with the fact that people are unique, have
different situations, and do not necessarily respond to the same
treatment?
Managers should balance fairness (consistency of disciplinary actions) with the fact that people are unique, have different situations, and do not necessarily respond to the same treatment by being flexible and considering each employee's situation individually.
This can involve taking into account factors such as an employee's past performance, their personal circumstances, and the nature of the offense committed.
Additionally, managers should ensure that disciplinary actions are proportionate to the severity of the offense and that they are communicated clearly and consistently to all employees.
Overall, managers should strive to treat employees fairly and consistently while recognizing and responding to the unique circumstances of each individual.
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Briefly explain the meaning of expropriation, confiscation, and nationalisation. What options are available for global companies to mitigate potential risks such as these, posed by a foreign government?
internaonal marketing
Expropriation, confiscation, and nationalization are terms that are commonly associated with international marketing. These terms relate to situations where a foreign government takes over the assets of foreign investors or companies operating within their borders.
Expropriation refers to the situation where the government takes ownership of private property and compensates the owner for the same. On the other hand, confiscation is the process of taking over the property without compensation while nationalization refers to the takeover of entire industries or sectors.
The options available for global companies to mitigate potential risks such as these posed by foreign governments include joint ventures, partnering with a local firm, insurance, and political risk analysis and consulting.
For instance, partnering with a local firm would allow a company to tap into the market knowledge of the locals, mitigate political risks, and understand the regulatory framework. Political risk analysis and consulting would enable companies to understand the risks involved in operating in a foreign market. Insurance provides protection against losses arising from political risks, and joint ventures enable companies to share risks and pool resources with local firms.
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In each case below, determine the effect on the sellers' total revenue and identify whether the demand curve in this particular market. is elastic, inelastic, or unit-elastic in the relevant price range, a. When the price per package of a brand of chocolate chip cookies increases from $5 to $9, monthly quantity demanded decreases from 20,000 to 10,000 packages. Initial total revenue is $ and final total revenue is $ Demand is (Click to select) - b. A fall in the price of sugar from $5 to $3 per carton raises weekly quantity demanded from 15,000 to 20,000 cartons. Initial total revenue is $ and final total revenue is $ Demand is [Click to select) c. A rise in the quantity demanded of a monthly fashion magazine from 20,000 to 30,000 copies occurs when its newsstand price is reduced from $10 to $7. Initial total revenue is $ and final total revenue is $ Demand is (Click to select) d. Daily quantity demanded of a particular model of earphones rises from 3,800 to 4,000 earphones if the price drops from $200 to $190, Demand is (Click to select) Initial total revenue is $ and final total revenue is $
a)When the price per package of a brand of chocolate chip cookies increases from $5 to $9, monthly quantity demanded decreases from 20,000 to 10,000 packages. Initial total revenue is $100,000 and final total revenue is $90,000. Demand is elastic.
b) A fall in the price of sugar from $5 to $3 per carton raises weekly quantity demanded from 15,000 to 20,000 cartons. Initial total revenue is $75,000 and final total revenue is $60,000. Demand is elastic.c) A rise in the quantity demanded of a monthly fashion magazine from 20,000 to 30,000 copies occurs when its newsstand price is reduced from $10 to $7. Initial total revenue is $200,000 and final total revenue is $210,000. Demand is elastic.d) Daily quantity demanded of a particular model of earphones rises from 3,800 to 4,000 earphones if the price drops from $200 to $190. Demand is inelastic. Initial total revenue is $760,000 and final total revenue is $760,000.
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In applying the Cost-Volume-Profit (CVP) analysis for short term
decision purposes, certain assumptions are relevant. Enumerate at
least five (5) of such assumptions.
Assumptions relevant to Cost-Volume-Profit (CVP) analysis for short-term decision purposes include:
1. Constant sales mix: The relative proportion of different products sold remains constant.
2. Fixed costs and variable costs: Costs can be classified into fixed and variable categories.
3. Linear relationships: The behavior of costs and revenues is assumed to be linear within the relevant range.
4. Stable production volume: The production volume remains stable during the period of analysis.
5. Single product or constant product mix: The analysis assumes a single product or a constant product mix without significant changes.
1. Constant sales mix assumption is relevant because it simplifies the analysis by assuming that the sales mix of products does not change. This allows for easier calculation of contribution margin and breakeven points.
2. The assumption of fixed and variable costs is important for segregating costs into different categories. Fixed costs remain constant regardless of the level of production, while variable costs change proportionately with production volume.
3. The assumption of linear relationships implies that costs and revenues will change in a consistent and predictable manner based on production volume. This assumption simplifies the analysis by assuming a constant cost or revenue per unit.
4. The stable production volume assumption assumes that the level of production remains constant during the period under consideration. This assumption allows for easier calculation of per-unit costs and revenues.
5. The assumption of a single product or constant product mix is relevant when analyzing a specific product's profitability. It assumes that there are no significant changes in the product mix being sold, which facilitates the calculation of contribution margin and breakeven points for that particular product.
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Currently, the market for potatoes is experiencing a surplus. What would we predict?
a. An increase in quantity demanded and an increase in quantity supplied
b. An increase in quantity demanded and a decrease in quantity supplied
c. A decrease in quantity demanded and an increase in quantity supplied
d. A decrease in quantity demanded and a decrease in quantity supplied
When there is a surplus in the market for potatoes, it means that the quantity supplied exceeds the quantity demanded at the prevailing price.
This implies that producers are producing more potatoes than consumers are willing to buy. In response to the surplus, we would expect a decrease in quantity demanded as consumers may reduce their purchases due to the abundance of potatoes in the market. At the same time, we would expect an increase in quantity supplied as producers try to sell off the excess inventory. Therefore, option c, which states a decrease in quantity demanded and an increase in quantity supplied, is the most appropriate prediction when there is a surplus in the market for potatoes.
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45 Refer to the accompanying graph. If this firm is a price taker, then when the price of each unit of output is $30, this firm's total revenue at its profit- maximizing level of output is MC ATC 0/1 points awarded Scored eBook Prin References Cost (3) 8 20 18 11 5 0 10 20 30 4045 50 GO 70 Cont 90 -P1 AVC -P2 -P3 100 110 Multiple Choice $3,000 $2,400 $1,800 $900
When the price of each unit of output is $30, the firm's total revenue at its profit-maximizing level of output is $1,500.
To determine the firm's total revenue at its profit-maximizing level of output, we need to find the corresponding quantity of output on the graph and multiply it by the price per unit.
From the graph, we can see that the profit-maximizing level of output occurs where marginal cost (MC) intersects with marginal revenue (MR), which is also the same as the intersection of MC and average total cost (ATC). In this case, it appears to be around the quantity of 50 units.
Given that the price per unit of output is $30, we can calculate the firm's total revenue as follows:
Total Revenue = Price per Unit * Quantity of Output
Total Revenue = $30 * 50
Total Revenue = $1,500
Therefore, when the price of each unit of output is $30, the firm's total revenue at its profit-maximizing level of output is $1,500.
When the firm is a price taker, its profit-maximizing level of output occurs where marginal cost intersects with marginal revenue or average total cost. By identifying this level of output on the graph and multiplying it by the price per unit, we can determine the firm's total revenue. In this case, at a price of $30 per unit, the firm's total revenue is $1,500.
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1- explain the meaning of public relations
2- discuss the meaning of theory and how theories play an important role to PR practitioners
3- discuss the theory of PR ans how IVY Lee contributed in the field of public relations
Ivy Lee's contributions laid the foundation for modern PR practices, emphasizing the importance of ethical communication, building relationships, and managing reputation. His approach has influenced the development of theories and frameworks in PR, such as the two-way symmetrical communication model and the importance of ethical standards in the profession.
1. Meaning of Public Relations:
Public relations (PR) refers to the strategic communication practices and activities undertaken by organizations or individuals to build and maintain positive relationships with their target audience, stakeholders, and the public. It involves managing the flow of information and influencing perceptions and attitudes to establish a favorable image and reputation. PR encompasses various tactics such as media relations, public affairs, crisis management, event planning, community engagement, and social media management, among others. The goal of public relations is to establish trust, credibility, and mutual understanding between an organization and its publics.
2. The Meaning of Theory and Its Importance to PR Practitioners:
In general, a theory refers to a set of principles, concepts, or explanations that seek to understand and explain a phenomenon. In the context of public relations, theories provide frameworks and models that help practitioners understand the communication process, human behavior, and the dynamics between organizations and their publics. Theories in PR guide practitioners in making informed decisions, planning effective communication strategies, and evaluating the impact of their efforts.
Theories play an important role for PR practitioners in several ways:
- Understanding Audiences: PR theories provide insights into the attitudes, motivations, and behaviors of different target audiences. This understanding helps practitioners tailor their communication messages and tactics to effectively reach and engage their intended publics.
- Planning and Strategy: PR theories offer frameworks for strategic planning, guiding practitioners in setting goals, identifying key messages, selecting appropriate channels, and developing communication campaigns that align with organizational objectives.
- Message Development: Theories help practitioners craft persuasive and impactful messages by considering factors such as cognitive processes, framing, agenda-setting, and media effects. These theories inform the selection of language, imagery, and storytelling techniques to effectively convey key messages.
- Relationship Building: PR theories emphasize the importance of building and maintaining relationships with various stakeholders. Theories such as relationship management, social exchange, and stakeholder theory guide practitioners in fostering positive relationships, trust, and mutual benefits with stakeholders.
- Evaluation and Measurement: Theories provide frameworks for evaluating the effectiveness of PR efforts. By applying theories of communication and persuasion, practitioners can assess the impact of their campaigns, measure outcomes, and make data-driven decisions for continuous improvement.
3. Theory of PR and Ivy Lee's Contribution:
The theory of PR encompasses various principles and models that guide practitioners in their communication efforts. One significant contributor to the field of public relations is Ivy Lee, often considered one of the pioneers of modern PR.
Ivy Lee, an American PR practitioner in the early 20th century, advocated for transparency and open communication between organizations and the public. His approach was based on the belief that organizations should provide accurate and timely information to the public, especially during times of crisis or controversy.
Lee's key principles included:
- Providing truthful and accurate information: He emphasized the importance of organizations being transparent and forthright in their communication with the public.
- Managing public perception: Lee believed in shaping public opinion through proactive communication and influencing media coverage to create a positive image for organizations.
- Two-way communication: He advocated for organizations to listen to and engage with the public, recognizing the importance of understanding public sentiment and addressing concerns.
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Solve the following Linear Programming using Simplex Method MAX 3X1 + 4X2 + 7X3 ST 3X1 + 4X2 + 5X3 <=300 2X1 + 8X2 <=200 10X1 + 5X2 + 5X3 <=300 X1, X2, X3>=0 a. Construct the Problem Tableau -2.5 POINT b. Do the first Iteration Table only-2.5 POINTS C. Alternatively you may solve the problem using Excel Solver 1 A▾ B I !!! !!! 14 22
The optimal value of the objective function is 23.857, and the decision variables are X1 = 260/27, X2 = 20/21, and X3 = 0.
Linear programming is a mathematical optimization method that is utilized to determine the optimal solution to a problem where the constraints and objectives are linear functions of the decision variables. . In this problem, we will solve the linear programming problem using the simplex method and also use the Excel solver to verify the results.
a. Construct the Problem TableauThe problem tableau is constructed by placing the objective function coefficients and slack/surplus variables in the first row, and then placing the coefficients of the constraints in the remaining rows. The augmented matrix is formed by adding a column for the right-hand side values of the constraints. Thus, the problem tableau is: 3 4 7 0 0 0 0 0 0 0 0 <= 300 3 4 5 1 0 0 0 0 0 0 0 <= 300 2 8 0 0 1 0 0 0 0 0 <= 200 10 5 5 0 0 1 0 0 0 0 <= 300
b. Do the first Iteration Table onlyThe first iteration involves selecting a pivot element (the most negative coefficient in the objective function row), using it to pivot and create a new basis, and then updating the tableau. The most negative coefficient in the objective function row is -7, which corresponds to variable X3. To pivot, we divide each of the right-hand side values by the corresponding pivot element to determine the row of the pivot, and then use elementary row operations to create a pivot of 1 and 0s in the pivot column. The updated tableau is: 3 2/7 0 7/3 0 0 0 0 0 20/3 0 <= 220 3 16/7 0 -5/7 0 0 0 0 0 40/7 0 <= 40/7 2 8/7 0 0 1 0 0 0 0 20/7 0 <= 100/7 10 5/7 1 0 0 0 0 0 0 30/7 0 <= 270/7The solution is not optimal, so we must perform another iteration to improve the solution. The most negative coefficient in the objective function row is now -2/7, which corresponds to variable X1. The pivot element is 3/2. To pivot, we divide each of the right-hand side values by the corresponding pivot element to determine the row of the pivot, and then use elementary row operations to create a pivot of 1 and 0s in the pivot column. The updated tableau is: 1 0 7/6 -2/9 0 0 0 0 1 -40/27 0 <= 260/27 0 1 -10/21 5/63 0 0 0 0 0 20/63 0 <= 20/21 0 0 4/7 -2/21 1 0 0 0 0 10/21 0 <= 100/7 0 0 23/21 -5/63 0 1 0 0 0 50/63 0 <= 630/23The solution is optimal, and the optimal value of the objective function is 23.857. The decision variables are X1 = 260/27, X2 = 20/21, and X3 = 0.
c. Alternatively you may solve the problem using Excel Solver. The problem can also be solved using Excel Solver by setting up the objective function and constraints in the spreadsheet and then using the solver to find the optimal solution. The optimal value of the objective function is 23.857, and the decision variables are X1 = 260/27, X2 = 20/21, and X3 = 0.
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How are unionized factories/businesses able to remain in business if they pay wages that are higher than those found in non-unionized factories/businesses? Provide evidence, if any, to support such arguments.
Unionized factories/businesses are able to remain in business despite paying higher wages compared to non-unionized counterparts for several reasons.
Here are some arguments and evidence to support this:
1. Increased Productivity: Studies have shown that unionized workplaces often exhibit higher levels of productivity compared to non-unionized ones. This can be attributed to various factors such as improved working conditions, employee training and development programs, better communication channels between management and workers, and the collective bargaining process. Higher productivity can offset the additional labor costs associated with higher wages, allowing unionized businesses to maintain their competitiveness and profitability. (Source: Hirsch, B. T., & Addison, J. T. (2012). The economic analysis of unions: New approaches and evidence.)
2. Reduced Turnover and Recruitment Costs: Unionized workplaces often have lower turnover rates because collective bargaining agreements usually include provisions for job security and fair treatment of workers. By retaining experienced employees, businesses can avoid the costs associated with frequent recruitment, training, and onboarding of new workers. This cost savings can help offset the higher wage expenses. (Source: Freeman, R. B., & Medoff, J. L. (1984). What do unions do?)
3. Enhanced Employee Satisfaction and Engagement: Unionized workplaces tend to have higher levels of employee satisfaction and engagement. This can be attributed to factors such as improved job security, fair grievance procedures, and a stronger voice in workplace decision-making. Satisfied and engaged employees are more likely to be committed to their work and contribute positively to the overall success of the business. (Source: Bryson, A., & Freeman, R. B. (2008). How does shared capitalism affect economic performance in the UK?)
4. Collaborative Labor-Management Relationships: Unionized businesses often have established mechanisms for labor-management collaboration and problem-solving. This can lead to better workplace relationships, improved communication, and greater trust between workers and management. By working together, both parties can identify and implement efficiency measures, cost-saving initiatives, and process improvements that can help offset higher labor costs. (Source: Kochan, T. A., Katz, H. C., & McKersie, R. B. (1986). The transformation of American industrial relations.)
It's important to note that the specific impact of unions on business viability may vary depending on industry, market conditions, and other factors. The above arguments provide general explanations supported by research, but the extent to which unionized businesses can remain competitive while paying higher wages depends on various contextual factors.
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One of the disadvantages of simulation is that it:
A) does not allow for very complex problem solutions.
B) produces solutions and inferences that are not usually transferable to other problems.
C) time compression may occur.
D) is very limited in the type of probability distributions that can be used.
E) interferes with the production system while the program is being run.
Option B is the correct answer. One of the disadvantages of simulation is that it produces solutions and inferences that are not usually transferable to other problems.
Simulation is a method of analyzing real-world systems that simulate the behavior of a system by employing mathematical equations or other models. It's one of the most common methods for experimenting with a system's behavior without actually building it in reality.
Advantages and Disadvantages of Simulation:
The benefits of simulation are the following:
Simulation is cost-effective; it saves time and money.It increases the understanding of the system's behavior and processes.It helps to develop new policies for the system or to improve existing ones.It helps to predict the outcome of the system when parameters are changed.It provides an environment for testing the system's stability when extreme conditions are introduced.The drawbacks of simulation are the following:
It might be tough to verify the simulation outcomes because it may be influenced by minor changes that might impact the entire simulation.The simulation may be complicated to construct and analyze, which might lead to errors.The findings and inferences are not always transferable to other problems.Simulation is not always 100% accurate because the initial model is based on assumptions and simplifications.To know more about simulation visit:
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A government security is purchased today with a maturity of exactly one year. The par value is $55,000 and the security is purchased for $50,000. What is the interest rate? O 12.5% 10.0% 11.1% 8.5% Question 44 1 pts The process of debt rollover does not eliminate the debt. Rather, it simply changes the party(ies) to whom the debt is owed. True False
The interest rate is 10%. If the par value of the government security is $55,000 and it is purchased for $50,000, the difference is $5,000. This difference between the purchase price and the par value of the security is the amount of interest paid when the security matures.
As such, the interest rate can be calculated as follows:$$\frac{interest}{principal}=\frac{\$5,000}{\$55,000}$$Simplifying the above equation gives:$$interest=0.0909\times principal$$Therefore, the interest rate is 9.09%. However, since the security has a maturity of one year, the interest must be converted to an annual rate. The annual rate is calculated by multiplying the interest rate by the number of periods in a year.
Since there is one period in a year for this security, the interest rate is equal to the annual rate. Hence the interest rate is 9.09%.To express this answer in percentage form, multiply the interest rate by 100 to get:$$9.09\%=\boxed{9.1\%}$$Therefore, the interest rate is 10%. The interest rate on a government security is a measure of the cost of borrowing. The rate is determined by several factors, including the creditworthiness of the issuer, the duration of the security, and the prevailing market conditions. In the question above, a government security with a maturity of one year is purchased for $50,000. The par value of the security is $55,000. The difference between the par value and the purchase price is $5,000, which represents the interest that will be paid when the security matures. To determine the interest rate, the interest is divided by the principal ($5,000/$55,000), which equals 0.0909. Multiplying this value by 100 gives the interest rate as 9.09%. Since the security has a maturity of one year, the interest rate is the same as the annual rate. To express the answer in percentage form, the interest rate is multiplied by 100 to give an interest rate of 10%.
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16 A company makes and sells a product that normally sells for $38. Because of a defective machine, 1,000 units were not made correctly and remain in inventory. Each of the defective units has the following costs assigned to it: S 10.00 per unit Direct material Direct labor $ 9.00 per unit S 8.00 per unit Variable manufacturing OH Fixed manufacturing OH $ 1.00 per unit The defective units can either: (i) be sold for $18 per unit, or (ii) repaired for $25 per unit and sold at the regular price of $38 per unit. Which alternative is preferred and by how much? A. Selling the units at the reduced price is preferred by $5,000. B. Selling the units at the reduced price is preferred by $7,000. C. Repairing the units and selling them at the regular price is preferred by $13,000. D. Repairing the units and selling them at the regular price is preferred by $14,000. E. None of the above.
option A is the correct $5,000 , In this question, we are given the following information: A company makes and sells a product that normally sells for $38. Because of a defective machine, 1,000 units were not made correctly and remain in inventory. Each of the defective units has the following costs assigned to it: S 10.00 per unit Direct material Direct labor $ 9.00 per unit S 8.00 per unit Variable manufacturing OH Fixed manufacturing OH $ 1.00 per unit The defective units can either: (i) be sold for $18 per unit, or (ii) repaired for $25 per unit and sold at the regular price of $38 per unit.
To find out which alternative is preferred and by how much, we need to calculate the cost and revenue for each option. Option (i) is to sell the defective units for $18 per unit. The cost of each defective unit is $28, which is calculated as:Direct material + Direct labor + Variable manufacturing OH + Fixed manufacturing OH = $10 + $9 + $8 + $1 = $28Therefore, the loss per unit for option (i) is $10. The total loss for 1,000 units would be:1,000 units × $10 per unit = $10,000Option (ii) is to repair the defective units at a cost of $25 per unit and then sell them for the regular price of $38 per unit.
The cost of each unit after repair would be:Direct material + Direct labor + Variable manufacturing OH + Fixed manufacturing OH + repair cost = $10 + $9 + $8 + $1 + $25 = $53The profit per unit would be:Revenue - cost = $38 - $53 = -$15The loss per unit would be $15. The total loss for 1,000 units would be:1,000 units × $15 per unit = $15,000Therefore, option (i) is preferred over option (ii). The difference between the two options is:$15,000 - $10,000 = $5,000Option A: Selling the units at the reduced price is preferred by $5,000.
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Which is the primary instrument of monetary policy used by the Fed?
a
Bond Rate targeting
b
Federal Funds Rate targeting set by the Federal Reserve Open Market Committee
c
Reserve Requirement targeting
d
Discount Rate targeting set by the Federal Reserve Discount Market Committee
The Federal Reserve has several monetary policy tools available to achieve its goals of promoting price stability, full employment, and stable economic growth. However, the primary instrument of monetary policy used by the Fed is Federal Funds Rate targeting set by the Federal Reserve Open Market Committee.(option b)
Federal Funds Rate is the interest rate at which depository institutions lend funds maintained at the Federal Reserve to other depository institutions overnight. The Federal Reserve influences the Federal Funds Rate by adjusting the supply of and demand for balances held at Federal Reserve Banks through the purchase or sale of Treasury securities in the open market, which is why it's referred to as open market operations.
The FOMC sets a target for the Federal Funds Rate and adjusts the rate to move toward this target. When the Fed wants to stimulate the economy, it will lower the Federal Funds Rate to make borrowing cheaper and encourage spending and investment.
When the Fed wants to curb inflation or slow down an overheated economy, it will raise the Federal Funds Rate to make borrowing more expensive and reduce spending and investment. Hence, we can say that the primary instrument of monetary policy used by the Fed is Federal Funds Rate targeting set by the Federal Reserve Open Market Committee.
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Wildhorse Company purchased a delivery truck for $40,000 on July 1, 2022. The truck has an expected salvage value of $4,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2022 and 12,000 in 2023. Wildhorse uses the straight-line method of depreciation. (a) Your answer is partially correct. Compute depreciation expense for 2022 and 2023. Depreciation Expense 2022 2023 Straight-line method $ $ $ 4500 Prepare the journal entry to record 2022 depreciation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit Prepare the journal entry to record 2023 depreciation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit Show how the truck would be reported in the December 31, 2023, balance sheet. WILDHORSE COMPANY Partial Balance Sheet
To calculate the depreciation expense for 2022 and 2023, we will use the straight-line method:
(a) Depreciation Expense for 2022:
Depreciation Expense 2022 = ($40,000 - $4,000) / 8
(b) Depreciation Expense for 2023:
Depreciation Expense 2023 = ($40,000 - $4,000) / 8
Now let's prepare the journal entries for recording the depreciation expense:
(a) Journal entry to record 2022 depreciation:
Date: December 31, 2022
Account Titles and Explanation Debit Credit
Depreciation Expense $4,500
Accumulated Depreciation - Truck $4,500
(Record the depreciation expense for 2022)
(b) Journal entry to record 2023 depreciation:
Date: December 31, 2023
WILDHORSE COMPANY
Partial Balance Sheet
As of December 31, 2023
Asset:
Truck $31,000
Less: Accumulated Depreciation ($4,500)
Net Truck $26,500
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Under the Affordable Care Act, Insurer may refuse to accept an internal appeal on a denied claim if
A. The calim is under $500
B. The insurer is unable to pay an appeal fee
C. the appeal is filed more than 180 days after the claim denial
D. The insured has submitted three appeals wihtin the calendar year
Under the Affordable Care Act (ACA), an insurer may refuse to accept an internal appeal on a denied claim if the appeal is filed more than 180 days after the claim denial.
This means that if a policyholder wants to challenge a claim denial by their insurer, they need to initiate the appeal process within 180 days of receiving the denial notification.
It is important for policyholders to be aware of this time limit and take prompt action if they wish to pursue an appeal. Filing the appeal within the designated timeframe is crucial to ensure that their case will be considered by the insurer.
Under the Affordable Care Act (ACA), an insurer may refuse to accept an internal appeal on a denied claim if the appeal is filed more than 180 days after the claim denial. This means that if a policyholder wants to challenge a claim denial by their insurer, they need to initiate the appeal process within 180 days of receiving the denial notification.
It is important for policyholders to be aware of this time limit and take prompt action if they wish to pursue an appeal. Filing the appeal within the designated timeframe is crucial to ensure that their case will be considered by the insurer.
Options A, B, and D are not correct in this context. The size of the claim, the insurer's ability to pay an appeal fee, or the number of appeals submitted within a calendar year do not determine whether an insurer can refuse to accept an internal appeal under the ACA.
Therefore, option C is the correct answer, stating that an insurer may refuse to accept an internal appeal if it is filed more than 180 days after the claim denial.
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Critical Analysis of Electronic Data Exchange (EDI) in International Business Transactions. Recommend and justify the efficiency and productivity of conducting international electronic commerce compared to traditional trade (off-line)
Conducting international electronic commerce through EDI offers significant efficiency and productivity benefits compared to traditional offline trade. The elimination of manual processes, real-time communication, and seamless integration of systems contribute to faster transaction cycles.
Electronic Data Exchange (EDI) plays a crucial role in facilitating international business transactions by enabling the seamless exchange of electronic documents and data between trading partners. When comparing the efficiency and productivity of conducting international electronic commerce (e-commerce) through EDI to traditional offline trade, several key advantages can be identified. Firstly, EDI eliminates the need for manual handling of paper-based documents, such as invoices, purchase orders, and shipping documents. This streamlines the entire transaction process, reduces paperwork, and minimizes the risk of errors and delays associated with manual data entry. The automation provided by EDI enhances efficiency, reduces administrative costs, and accelerates transaction cycles. Secondly, international e-commerce through EDI enables real-time communication and collaboration between trading partners across different time zones and geographical locations. This allows for faster decision-making, quicker response times, and enhanced supply chain visibility. With EDI, businesses can track shipments, monitor inventory levels, and manage orders in a more timely and efficient manner, leading to improved productivity.
Additionally, EDI enables seamless integration of systems and data exchange between different stakeholders, such as suppliers, distributors, and logistics providers. This integration promotes interoperability, facilitates information sharing, and enhances coordination among various parties involved in the international trade process. As a result, businesses can achieve higher levels of supply chain efficiency and improve overall productivity.
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A bank quotes 1.07 – 1.13 $/€ (bid & ask quotes), and 105.6 – 110.6 $/¥ (bid & ask quotes), calculate bid & ask quotes, in equilibrium (no arbitrage) for ¥/€. Explain your calculations and arbitrage possibilities if the Market Exchange rate for yens per euro is more (and less) than equilibrium.
The bid quote for ¥/€ in equilibrium is 0.00967 ¥/€ and the ask quote is 0.01070 ¥/€, and if the Market Exchange rate deviates from these equilibrium quotes, arbitrage opportunities arise for investors to exploit and bring the exchange rate back towards equilibrium.
To calculate the bid and ask quotes for ¥/€ in equilibrium, we can use the cross rate formula:
¥/€ = ($/€) / ($/¥)
Bid Quote:
To calculate the bid quote for ¥/€, we take the bid quote for $/€ and divide it by the ask quote for $/¥.
Bid Quote for ¥/€ = (1.07 $/€) / (110.6 $/¥) = 0.00967 ¥/€
Ask Quote:
To calculate the ask quote for ¥/€, we take the ask quote for $/€ and divide it by the bid quote for $/¥.
Ask Quote for ¥/€ = (1.13 $/€) / (105.6 $/¥) = 0.01070 ¥/€
In equilibrium, the bid and ask quotes for ¥/€ would be 0.00967 ¥/€ and 0.01070 ¥/€, respectively.
Arbitrage Possibilities:
If the Market Exchange rate for yens per euro is more than the equilibrium bid quote (0.00967 ¥/€), there would be an arbitrage opportunity for investors to sell yens and buy euros, leading to an increase in demand for euros and a decrease in demand for yens, causing the yen to depreciate and the euro to appreciate.
If the Market Exchange rate for yens per euro is less than the equilibrium bid quote, there would be an arbitrage opportunity for investors to sell euros and buy yens, leading to an increase in demand for yens and a decrease in demand for euros, causing the yen to appreciate and the euro to depreciate.
In both cases, arbitrage actions by market participants would help bring the Market Exchange rate closer to the equilibrium bid and ask quotes for ¥/€.
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11. Diversity is the overall consequence of the individual differences present in the workforce. True or false?
12. Showing sensitivity means-
a) being aware of your own assumptions and prejudices and challenging them
(b) ignoring cultural norms and practices when you work with others
13. Communication includes speaking, listening, use of body language and written communication. True or false?
14. Cultural differences can include –
(a) different ideas about movies
(b) reading body language differently
11. The given statement, "Diversity is the overall consequence of the individual differences present in the workforce" is True.
12. The term Diversity means differences in age, sex, race, religion, ethnicity, sexual orientation, and able-bodiedness, whereas individual differences are unique characteristics possessed by every employee. Thus, diversity is the overall consequence of the individual differences present in the workforce.
13. Showing sensitivity means being aware of your assumptions and prejudices and challenging them. The given option a is the correct answer. Sensitivity means being aware of the assumptions, beliefs, and prejudices that affect how people perceive and treat others. It involves being thoughtful and respectful of others, especially those whose backgrounds differ from one's own.
14. The statement, "Communication includes speaking, listening, use of body language and written communication" is True. Cultural differences can include reading body language differently. The given option b is the correct answer.
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Procter and Gamble (PG) paid an annual dividend of $2.91 in 2018. You expect PG to increase its dividends by 7.8% per year for the next five years (through 2023), and thereafter by 3.3% per year. If the appropriate equity cost of capital for Procter and Gamble is 8.8% per year, use the dividend-discount model to estimate its value per share at the end of 2018. The price per share is $ (Round to the nearest cent.)
The Dividend Discount Model (DDM) is a technique for determining the intrinsic value of a company's stock by basing it on the present value of anticipated future dividends.
We must determine the present value of the anticipated future dividends in order to predict Procter & Gamble's (PG) share price per share at the end of 2018 using the dividend-discount model.
Step 1: Determine the current value of the dividends due between 2019 and 2023.
Dividends: $2.91 * (1 + 7.8%) = $3.13 for 2019.
Dividends: $3.13 * (1 + 7.8%) = $3.37 for 2020.
Dividends: $3.37 * (1 + 7.8%) = $3.63 for 2021.
Dividends: $3.63 * (1 + 7.8%) = $3.92 for 2022.
Dividends: $3.92 * (1 + 7.8%) = $4.23 in 2023.
Step 2: Determine the terminal value beyond 2023's present value.
Terminal Dividend: $4.23 * (1 + 3.3%) = $4.37 in 2024
Using the dividend-discount model and an annual equity cost of capital of 8.8%, the terminal value in 2024 is $4.37 / (0.088 - 0.033) = $79.27.
Step 3: Determine the dividends' terminal value and the dividends' present value.
Dividends from 2019 through 2023's present value are
$3.13 / (1 + 0.088) and
$3.37 / (1 + 0.088).^2 + $3.63 / (1 + 0.088)^3 + $3.92 / (1 + 0.088)^4 + $4.23 / (1 + 0.088)^5
= $14.67
$79.27 / (1 + 0.088)
the terminal value's present value in 2024.^5 = $56.50
Step 4 Calculate the total present value.
The total current value is $71.17 ($14.67 + $56.50).
As a result, based on the dividend discount model, Procter & Gamble's expected value per share at the end of 2018 will be roughly $71.17.
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.Josh and Victor are discussing the Yan Corporation. Josh earned $7,000 from dividends in the last two months, and is quite excited. Victor is discussing an annual meeting and the votes he cast for the board. What is implied here?
1. Josh is a stockholder, while Victor is a creditor.
2. Josh and Victor are both stockholders.
3. Josh and Victor are both creditors.
4. Victor is a creditor, while Josh is a stockholder
Both Josh and Victor are stockholders in the Yan Corporation, as indicated by their involvement in dividends and voting. (Option 2)
Based on the information provided, it can be inferred that both Josh and Victor have involvement and interest in the Yan Corporation. Josh's earnings from dividends indicate that he is receiving a share of the profits distributed to stockholders. This implies that Josh is a stockholder of the corporation.
On the other hand, Victor's mention of casting votes for the board at an annual meeting suggests that he is also a stockholder. Stockholders typically have the right to vote in corporate matters, such as board elections. Therefore, both Josh and Victor are referred to as stockholders in the discussion. This implies that they both have ownership interests in the Yan Corporation.
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Describe the accounting treatment for asset impairment under ASPE and IFRS.
Under ASPE, the accounting treatment for asset impairment is as follows:Impairment: The impairment of a long-lived asset (including goodwill) occurs when its carrying amount surpasses the aggregate undiscounted cash flows expected to be derived from its use and eventual disposition.
That is, when the asset's fair value is less than its carrying value.Impairment losses are measured as the excess of the carrying amount over the fair value of the asset, with the carrying amount being written down to fair value. When an asset's carrying amount has been decreased due to an impairment loss, depreciation is recalculated on the lower carrying amount, taking into account any remaining service life.
IFRS requires the accounting treatment for asset impairment as follows: Impairment is defined as a loss in the carrying amount of an asset that is recognized in the statement of profit or loss and other comprehensive income. When the asset's carrying amount surpasses its recoverable amount, impairment losses occur. Impairment losses are calculated as the difference between the asset's carrying amount and its recoverable amount. The recoverable amount is the asset's fair value less costs to sell, which is the amount that can be obtained from the sale of the asset in an active market, less any selling costs.
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A single tenant property measures 100,000 SF. It has a tenant paying an in-place rent of $82/SF/Yr and operating expenses of $40/SF/Yr. The lease is month-to-month. Based on market levels, the rent should be $78/SF/Yr. The property is up for sale and the prevailing cap rate for this type of property is 4.0%. By how much would a buyer over pay if they purchased the property based on the in-place rent?
The property measures 100,000 square feet and has a tenant who is renting it at 82 per square foot annually. There are also operating expenses that need to be paid at 40 per square foot annually. The lease agreement is month-to-month. The rental amount should be 78 per square foot annually, based on market conditions. The property is for sale, and the cap rate for this type of property is 4%. So, let's look at how to solve this:
Annual Rent = 82 * 100,000 = 8,200,000 Annual Operating Expenses = 40 * 100,000 = 4,000,000 Net Operating Income (NOI) = 8,200,000 - 4,000,000 = 4,200,000 Market Value = 4,200,000 / 0.04 = 105,000,000 Purchase Price = 82 * 100,000 / 0.04 = 205,000,000So, the property's current rental income produces a market value of 105 million.
However, the seller is offering the property for 205 million, which is 100 million more than its market value. So, if the buyer purchases the property based on the in-place rent, they will overpay by 100 million.
Hence, the buyer will overpay by 100 million if they purchase the property based on the in-place rent.
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Discussion Initial Response Due by Wednesday: It is payday! You look at your pay stub and realize you received a $4,500 bonus. What do you plan to do with your windfall? You have three choices: (1) buy a bond, (2) pay off a loan, or (3) loan the money to family. Using the present value charts in this link (lump sum) and this link (annuity), calculate present value of the three options. Do not forget to show your work. Discuss which option you would choose and why. Consider financial and non-financial influences. There are no right or wrong answers: simply support your decision. Discussion Response Due by Saturday: Respond to another student. Option Information Present Value Formula PV Answer Calculate the present value of investing in a start-up company if you expect to receive $5,000 in 4 Example years and the annual market rate is 6%. Remember to use the Present Value factor in your calculation. $5,000 X.79209 $3,960.45 #1 Pay $4,500 for a bond. The bond pays $5,000 at the end of 2 years with a 10% coupon (interest) paid semi-annually (every 6 months). What is the present value of the bond? Is this a good deal since you are paying $4,500? #2 Pay off a loan. The loan is due at the end of 2 years (balloon loan). It has a balance of $5,500 and an interest rate of 12% that accrues semi-annually. The bank said they will take the present value of the loan. Do you have enough money to pay off the loan? # 3 Lend money to your family for a home renovation. They will pay you $5,000 at the end of the 2 years. Is this a good deal if the annual market rate is 6%?
The interest paid on a financial instrument, such as a bond or loan, twice a year is referred to as a semi-annual interest payment.
Semi-annual interest payment (Pmt) = FV × r = $5,000 × 5% = $250. Semi-annual discount rate (i) = 10%/2 = 5%. To calculate the present value of an annuity, we use the following formula: PV of Annuity = Pmt × [(1 - (1 + i)^-n) / i] Here, Pmt = $250i = 5% (semi-annual) n = 4. Using the above formula, we get: PV of Annuity = $250 × [(1 - (1 + 5%)^-4) / 5%] = $961.54. To calculate the present value of the face value, we use the following formula: PV of Face Value = FV / (1 + i)n= $5,000 / (1 + 5%)^4= $4,169.87. Hence, the Present value of the bond is equal to the sum of the present value of the annuity and the present value of the face value= is $961.54 + $4,169.87= $5,131.41
Yes, this is a good deal since the present value of the bond is greater than the cost of the bond i.e. $4,500.#2 Pay off a loan. The loan is due at the end of 2 years (balloon loan). It has a balance of $5,500 and an interest rate of 12% that accrues semi-annually. The bank said they will take the present value of the loan.
Given, Balance (FV) = $5,500Semi-annual interest rate (i) = 12%/2 = 6%Period (n) = 2 years = 4 semiannual periods. To calculate the present value of a lump sum, we use the following formula: PV = FV / (1 + i)n. using the above formula, we get: PV = $5,500 / (1 + 6%)^4= $3,868.14. Since the present value of the loan is less than $4,500, you have enough money to pay off the loan.#3 Lend money to your family for a home renovation.
Given, FV = $5,000n = 2 years i = 6%. To calculate the present value of a lump sum, we use the following formula: PV = FV / (1 + i)n. Using the above formula, we get PV = $5,000 / (1 + 6%)^2= $4,499.88. Since the present value of face value is less than $4,500, it is not a good deal to lend money to your family for a home renovation at an annual market rate of 6%.
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James acquired the following shares in Rio Grande plc:
Date of acquisition No of shares Cost
10.12.99 10,000 25,000
07.10.08 3,000 12,000
12.08.20 6,000 30,000
James disposed of 12,000 of his shares on 7 August 2020 for £58,000.
The capital gain/loss from the disposal of 12,000 shares on August 7, 2020 is a capital gain of £15,789.47.
To calculate the capital gain or loss, we need to determine the cost basis of the shares sold and compare it to the proceeds from the sale.
First, let's calculate the total cost basis of the shares James acquired:
Total Cost = Cost of 10,000 shares + Cost of 3,000 shares + Cost of 6,000 shares
Total Cost = £25,000 + £12,000 + £30,000 = £67,000
Next, let's calculate the cost basis of the 12,000 shares sold:
Cost Basis = (Number of Shares Sold / Total Number of Shares) * Total Cost
Cost Basis = (12,000 / 19,000) * £67,000 = £42,210.53
Finally, the capital gain or loss is calculated as follows:
Capital Gain/Loss = Proceeds from Sale - Cost Basis
Capital Gain/Loss = £58,000 - £42,210.53 = £15,789.47
Therefore, James has a capital gain of £15,789.47 from the disposal of 12,000 shares on August 7, 2020.
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Which of the following statements is not correct? a. If the income effect is greater than the substitution effect, the labor-supply curve is downward sloping. b. If the substitution effect is greater than the income effect, the labor-supply curve is upward sloping. C. If Miguel experiences a wage decrease and works less, the income effect is greater than the substitution effect for him. d. If Fiona gets a higher wage and works more, the substitution effect is greater than the income effect for her.
The incorrect statement is option b: If the substitution effect is greater than the income effect, the labor-supply curve is upward sloping. The labor supply curve is a representation of the relationship between the wage rate and the number of hours of labor that workers are willing to offer, ceteris paribus (other things remaining constant). The correct option is b.
It can slope upward, downward, or neither, depending on whether the substitution effect or the income effect dominates in response to a wage change. In other words, it depicts how the number of hours supplied responds to a change in the wage rate. The curve will shift if there is a change in any of the non-wage factors that influence labor supply.
Option a: If the income effect is greater than the substitution effect, the labor-supply curve is downward sloping. The labor supply curve will be downward sloping if the income effect dominates. This happens when an increase in the wage rate results in a positive income effect (i.e., higher real income), which causes workers to reduce their hours worked because they value leisure more.
Option c: If Miguel experiences a wage decrease and works less, the income effect is greater than the substitution effect for him. A worker would work less if the income effect dominated in response to a wage reduction. The income effect is positive, implying that the worker's real income has decreased, which has led him to cut back on his working hours because the values leisure time more.
Option d: If Fiona gets a higher wage and works more, the substitution effect is greater than the income effect for her. A worker would work more if the substitution effect dominated in response to a wage increase. The substitution effect is positive, which implies that the worker's real wage rate has increased relative to the opportunity cost of leisure, prompting her to substitute labor for leisure time.
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