The lack of creativity among university graduates can lead to severe consequences within organizations/companies and our communities/societies. Creative thinking and problem-solving are essential skills that enable people to tackle the issues they face every day.
Creative graduates can contribute to society's growth and bring new perspectives to companies, leading to innovation and advancement.However, if university graduates lack creativity, they may face problems finding jobs or fitting into a company's culture that values creativity and innovation. These graduates may also struggle to adapt to changes, a trait that is essential for individuals working in dynamic environments. Furthermore, organizations/companies that hire these graduates may miss out on potential opportunities and may not be able to achieve their full potential without innovative thinking.Creativity is also important for communities and societies. Without creative graduates, societies may lack new ideas that can help solve their problems and improve their living standards. Creative graduates are the ones who can think outside the box and develop solutions to complex problems. They can come up with new ideas and create new products and services that can benefit society as a whole.
In conclusion, the lack of creativity among university graduates can lead to negative consequences for both individuals and society. It is crucial for universities to incorporate creative thinking in their curriculum to prepare students for the challenges they will face in the real world. Companies and organizations should also recognize the importance of creative thinking and hire graduates who possess this skill to help them thrive in a rapidly changing environment.
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Companies buy each other. When this happens, both companies must change to allow the two organizations to become one. But we know, from research, that most mergers do not really succeed. Years later the two companies still haven't integrated How would you take two antagonistic companies — perhaps two strong former competitors, or two radically different business types (like merging a Silicon Valley tech company and a 150 year old insurance company) — and help the staff in both come together and work together, creating a new common corporate culture.
Creating a Unified Corporate Culture in the Merger of Antagonistic Companies
Merging two antagonistic companies, especially if they were former competitors or vastly different in business types, presents a significant challenge in creating a new common corporate culture. The success of a merger heavily relies on the integration of staff from both organizations and their ability to work together harmoniously. This report outlines strategies and recommendations to facilitate the process of merging two antagonistic companies and fostering a unified corporate culture.
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1. Explain how equity securities having significant influence
are accounted for and reported in the financial statements. Include
a discussion of the criterion for these securities in terms of an
inve
Equity securities with significant influence are accounted for using the equity method, where the investor records the investment at cost and adjusts its value based on its share of the investee's profits or losses. The investor reports the carrying value of the investment and its share of the investee's profits or losses in its financial statements.
How are significant influence equity securities accounted for?Equity securities that have significant influence over the operating and financial policies of another company are accounted for and reported using the equity method. The equity method is used when an investor has the ability to exercise significant influence, but not control, over the investee.
The equity method requires the investor to initially record the investment at cost, including any transaction costs. Subsequently, the investor's share of the investee's profits or losses is recognized in the investor's income statement. The investor also adjusts the carrying value of the investment to reflect its share of the investee's changes in equity.
To determine whether an investor has significant influence, the following factors are considered:
1. Ownership stake: Generally, an ownership stake of 20% or more of the voting power of the investee's shares is an indication of significant influence. However, significant influence can also exist with a lower ownership percentage if other factors are present.
2. Board representation: The presence of the investor's representatives on the investee's board of directors or other governing bodies can indicate significant influence. This allows the investor to participate in the decision-making process and influence the investee's policies.
3. Participation in policy-making: If the investor is involved in the investee's strategic planning, financial or operating policies, it suggests significant influence.
4. Interchange of managerial personnel: The exchange of key managerial personnel between the investor and the investee can demonstrate significant influence.
5. Technological dependency: If the investor provides significant technological expertise or licensing to the investee, it may indicate significant influence.
Once it is determined that an investor has significant influence over an investee, the equity method is applied. The investor recognizes its share of the investee's profits or losses as an adjustment to the carrying value of the investment. This recognition is usually based on the investor's ownership percentage of the investee's shares. The investor also recognizes its share of the investee's other comprehensive income.
In the investor's financial statements, the carrying value of the investment is reported as a single line item, usually labeled as "Investments in Associates" or a similar description. The investor also reports its share of the investee's profits or losses as a separate line item, typically labeled as "Share of Profit (Loss) of Associates."
In summary, equity securities that have significant influence are accounted for using the equity method. The investor initially records the investment at cost and subsequently adjusts the carrying value based on its share of the investee's profits or losses. The investor's financial statements disclose the carrying value of the investment and its share of the investee's profits or losses.
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The One Protaras DAG O. Odphone ODA Question 6 The Close Project or Phase process is applicable to which activity(ies) listed below? O A. Cancelled projects O B. Completed projects O C. Completed phases in a multi-phase project O D. All of the above
D. All of the above The Close Project or Phase process is applicable to all the activities listed below:
A. Cancelled projects: Even if a project is cancelled before completion, the Close Project or Phase process is still performed to properly close and document the project, conduct any necessary project closure activities, and ensure proper handover or termination.
B. Completed projects: When a project is successfully completed, the Close Project or Phase process is carried out to formally close the project, document lessons learned, perform project reviews, and transition the project deliverables or outcomes to the appropriate stakeholders.
C. Completed phases in a multi-phase project: In projects with multiple phases, each phase will have its own closure activities and deliverables. The Close Project or Phase process is applied at the end of each phase to review the phase's performance, ensure completion of deliverables, and prepare for the next phase.
Therefore, the Close Project or Phase process is applicable to all these scenarios, encompassing cancelled projects, completed projects, and completed phases within a multi-phase project.
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What could be taken now to reduce the chances of a similar tragedy occurring in the future? In your answer, please consider what actions, if any, the various individuals and groups mentioned in question 1 could take. Please discuss how the company level, worker level and government level,
Fashion companies, workers, and government bodies must collaborate to ensure safe and ethical practices in the fashion industry. Companies must adhere to an ethical code of conduct, while workers must advocate for their rights.
The tragedy at the Rana Plaza complex highlights the dangers of underregulated working environments and the limited accountability faced by global fashion firms. This tragic event occurred in April 2013, when the Rana Plaza complex in Bangladesh collapsed, killing over 1,100 people, most of whom were workers employed by clothing manufacturers. The accident was mainly attributed to substandard building construction and poor working conditions.
To avoid similar tragedies happening in the future, the various individuals and groups mentioned in question 1 should take the following actions:
Company Level:
Fashion companies must guarantee that they source their products from reputable manufacturers that adhere to health and safety requirements. Companies should also focus on implementing and following a strict ethical code of conduct. To ensure ethical sourcing, companies can contract independent third-party organizations to conduct audits of their supply chains.
Worker Level:
To prevent future tragedies, workers must speak out against unfair working conditions and other unsafe practices. They should also form unions to represent their interests and collaborate with management to ensure their rights are protected.
Government Level:
Government bodies should enforce and tighten safety regulations to ensure that all manufacturers are held accountable for safety in their working environments. Governments should also enact legislation to ensure that companies operating in their territories adhere to the ethical code of conduct. Furthermore, government authorities should monitor the effectiveness of these regulatory mechanisms to ensure that they are regularly reviewed and adjusted.
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Attribution Theory There is a universal need to seek justifications and explanations for people's actions, both our own and those of the people we encounter, and therefore to determine who or what is responsible for those actions. Psychologists note that such an inherent need for explanation will often manifest itself as a tendency to attribute behaviour to either internal or external causes, depending on the circumstances. This tendency is known as attribution theory. First proposed in 1958 by Austrian psychologist Fritz Heider, attribution theory presumes that all human behaviour is motivated by internal or external factors. In the latter case, situations are sometimes perceived as being beyond a person's control, meaning that individuals experience a diminished sense of responsibility. For instance, if an employee arrives to work late due to heavy traffic, the tendency is to project accountability outward. On the other hand, people tend to feel responsible when they can impact outcomes. Studying hard, training diligently, and doing one's best to be a good parent, for example, are viewed as stemming from personal motivations. In such cases, people describe their own efforts as the cause of their behaviours While it is easy to attribute unexpected events to external forces, the line between an internal and an external cause is often unclear. In a situation where a person is engaged in a heated argument and is behaving aggressively, an observer will likely think that person is prone to anger or mean- spiritedness. Such an attribution often happens without knowing how the argument arose in the first place, with the observer assuming the behaviour is due to the person's personality. This tendency for observers to focus on the internal reasons for behaviour, rather than the external, is known as 'correspondence bias'. In the same scenario, however, the person behaving aggressively may feel as if he or she has been the victim of some injustice and that such a reaction is therefore justified. A similar tendency can be seen in the reactions people have to their own experiences. When individuals have positive experiences, like getting a promotion or achieving a goal, they are inclined to associate their own efforts with their success. In contrast, when people undergo negative experiences, the bias is inverted, and they are likely to ascribe disappointment to external factors. Rather than assigning failure to their faults or lack of ability, people magnify the factors outside their control. By casting responsibility outward, they are able to blame these external factors for their misfortunes and maintain the perception of themselves as victims. Ultimately, it seems that offering internal and external reasons for our behaviours allows us to emphasise our positive aspects and boosts our self-esteem, while providing justification for our negative actions, which prevents us from feeling guilty. Only by understanding the role that ego and self-perception unconsciously play in attributing our successes and failures can we make changes to the way we act in any number of situations. Choose the correct letter, A, B, C or D. 16 The writer suggests that people are driven to explain why things happen because they feel as though it is possible to learn from past mistakes. A B they possess an innate urge to assign responsibility to someone or something. с they are accountable to others for explaining why circumstances change. D they have a natural fear of things that are beyond their control. A 17 According to the writer, individuals who feel they have no control of a situation have a tendency to blame themselves for perceived failures. believe they are less responsible for the outcome of an event. are more likely to draw negative conclusions about people. consider behaving poorly toward others to be justifiable. B с D 18 The writer says that 'correspondence bias' occurs when people A fail to understand an individual's true personality. B interpret a person as a victim without justification. C attempt to change circumstances after reaching an outcome. conclude that behaviour is determined by a person's personality. D 19 The writer mentions that when people succeed, they tend to magnify the extent of their accomplishments. overlook the contribution of natural talent. A B C attribute their results to internal factors. D become less able to handle future disappointments.
Attribution Theory There is a universal need to seek justifications and explanations for people's actions. First proposed in 1958 by Austrian psychologist Fritz Heider, attribution theory presumes that all human behaviour is motivated by internal or external factors.
16. The writer suggests that people are driven to explain why things happen because they possess an innate urge to assign responsibility to someone or something. This urge stems from the natural human tendency to make sense of the world around us and to understand causality. By attributing actions and events to specific causes, individuals can create a sense of order and control in their lives. Additionally, by understanding the reasons behind certain outcomes, people can learn from their past mistakes and make adjustments for the future.
17. According to the writer, individuals who feel they have no control of a situation are more likely to believe they are less responsible for the outcome of an event. This perception arises from a diminished sense of agency when circumstances are perceived as beyond one's control. In such cases, people may attribute failures or negative outcomes to external factors, relieving themselves of personal responsibility. This attribution allows individuals to protect their self-esteem and maintain a positive self-image.
18. The writer says that 'correspondence bias' occurs when people conclude that behavior is determined by a person's personality. This bias refers to the tendency of observers to attribute behavior to internal characteristics rather than considering external situational factors. It is a common cognitive bias that can lead to inaccurate judgments about others' behavior and motivations.
19. The writer mentions that when people succeed, they tend to attribute their results to internal factors. This means they believe their own efforts, skills, or abilities contributed to their accomplishments. This attribution allows individuals to take credit for their successes and boost their self-esteem. In contrast, when facing disappointments or failures, individuals may magnify external factors, such as luck or external circumstances, to maintain a positive self-perception and avoid personal blame.
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assume that international fruit traders sells fruit baskets in a perfectly competitive market. the market price of a fruit basket is $22. to maximize profits, the quantity of fruit baskets that the firm just sell is?
To maximize profits in a perfectly competitive market, the firm should produce and sell the quantity where marginal cost (MC) is equal to the market price (P). This is because in a perfectly competitive market, each unit of output sold fetches the same market price.
So, if the market price of a fruit basket is $22, the firm should sell the quantity where the marginal cost equals $22. Without the information on the firm's marginal cost, it is not possible to determine the specific quantity of fruit baskets that should be sold to maximize profits. The firm would need to analyze its production costs and determine the quantity at which marginal cost equals $22.
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The Empire Inc. is an all-equity firm. It expects perpetual earnings before interest and taxes (EBIT) of $80 million per year. Its equity required return is 12%. The firm is subject to a 25% tax rate and has 10 million shares outstanding.
a. What is the value of Empire? What is its share price?
b. Empire has an opportunity at an expansion project. The project will require $150 million investment and will generate $40 million pre-tax perpetual annual cash flow. What is Empire Inc. value and share price if it accepts the project and finances it with new equity only?
c. Empire can borrow any amount at 10.0%. What is Empire value and share price, if it finances the project with debt?
a. Value of Empire is $666.67 million and Share Price is $66.67 per share.
b. The Empire Inc. value and share price if it accepts the project and finances it with new equity only is New Value of Empire is $916.67 million and New Share Price is $91.67 per share .
c.if Empire can borrow any amount at 10.0%. Empire value and share price, if it finances the project with debt New Value of Empire is $572.92 million and New Share Price is $57.29 per share.
To calculate the value of Empire Inc., we can use the constant growth dividend discount model (DDM). The value of the firm can be calculated as the present value of its perpetual earnings, discounted at the equity required return.
Value of Empire = EBIT / Equity Required Return
Value of Empire = $80 million / 12%
Value of Empire = $666.67 million
The share price of Empire Inc. can be calculated by dividing the value of the firm by the number of shares outstanding:
Share Price = Value of Empire / Number of Shares Outstanding
Share Price = $666.67 million / 10 million
Share Price = $66.67 per share
b. If Empire accepts the expansion project and finances it with new equity only, we need to calculate the additional earnings generated by the project. The additional earnings before taxes would be $40 million. After considering the 25% tax rate, the additional earnings after tax would be $30 million ($40 million * (1 - 0.25)).
The new perpetual earnings before interest and taxes (EBIT) for Empire would be the sum of the original earnings and the additional earnings:
New EBIT = Original EBIT + Additional Earnings
New EBIT = $80 million + $30 million
New EBIT = $110 million
Using the same equity required return of 12%, we can calculate the new value of Empire Inc.:
New Value of Empire = New EBIT / Equity Required Return
New Value of Empire = $110 million / 12%
New Value of Empire = $916.67 million
The new share price can be calculated by dividing the new value of the firm by the number of shares outstanding:
New Share Price = New Value of Empire / Number of Shares Outstanding
New Share Price = $916.67 million / 10 million
New Share Price = $91.67 per share
c. If Empire finances the project with debt, the interest expense on the debt would be tax-deductible. Assuming Empire borrows the entire $150 million at a 10% interest rate, the interest expense would be $15 million per year ($150 million * 10%).
The new earnings before taxes (EBT) would be the original earnings plus the additional earnings, minus the interest expense:
New EBT = Original EBIT + Additional Earnings - Interest Expense
New EBT = $80 million + $40 million - $15 million
New EBT = $105 million
After considering the 25% tax rate, the new earnings after tax would be $78.75 million ($105 million * (1 - 0.25)).
Using the same equity required return of 12%, we can calculate the new value of Empire Inc. when financed with debt:
New Value of Empire = (EBT - Interest Expense) / Equity Required Return
New Value of Empire = ($78.75 million - $15 million) / 12%
New Value of Empire = $572.92 million
The new share price can be calculated by dividing the new value of the firm by the number of shares outstanding:
New Share Price = New Value of Empire / Number of Shares Outstanding
New Share Price = $572.92 million / 10 million
New Share Price = $57.29 per share
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1. One way of screening in the automobile insurance market is for companies to
A. offer policies with different deductibles and different premiums.
B. eliminate policies with no−claim bonuses because these policies are usually not profitable.
C. insure only careful drivers.
D. insure only risky drivers.
E. offer warranties.
One way of screening in the automobile insurance market is for companies to offer policies with different deductibles and different premiums.
The correct option is B.
They employ a variety of tools to achieve this, one of which is offering different policies with different premiums and deductibles. By offering different policies with different premiums and deductibles, insurers can attract different kinds of customers.For example, a customer who wants a lower monthly premium may opt for a policy with a higher deductible. Conversely, a customer who wants comprehensive coverage and can afford a higher monthly premium may choose a policy with a lower deductible.
The choice of deductible and premium can signal to the insurer whether the customer is high or low risk. In general, higher deductibles and lower premiums attract riskier drivers, while lower deductibles and higher premiums attract safer drivers. Therefore, by offering policies with different premiums and deductibles, insurers can screen for risk and price their policies accordingly.In addition to offering different policies, insurers may also use other screening tools, such as driving records, credit scores, and age. By using these tools, insurers can identify drivers who are more likely to file claims and adjust their premiums accordingly. In this way, screening helps insurers to maintain profitability while providing affordable insurance to low-risk drivers.Screening in automobile insurance markets refers to the practice of distinguishing between high-risk and low-risk customers. Insurers aim to protect their profitability by identifying and separating high-risk drivers from low-risk drivers. They employ a variety of tools to achieve this, one of which is offering different policies with different premiums and deductibles. By offering different policies with different premiums and deductibles, insurers can attract different kinds of customers. For example, a customer who wants a lower monthly premium may opt for a policy with a higher deductible.
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different jobs within the same profession may require more or less education. t/f
The statement "different jobs within the same profession may require more or less education" is true.
Different jobs within the same profession may indeed require more or less education. While there are often minimum educational requirements for entry into a particular profession, the level of education needed can vary based on the specific role and responsibilities within that profession.
Professions typically encompass a range of job roles and positions, each with varying levels of complexity, specialization, and decision-making authority. Some roles may require a higher level of education, such as advanced degrees or specialized certifications, to meet the demands and qualifications necessary to perform the tasks effectively.
For example, within the field of healthcare, various job roles exist, ranging from medical assistants who typically require a certificate or diploma program to specialized surgeons who require extensive education and training, including medical school and residency programs.
Similarly, in the field of engineering, different job roles may require varying levels of education. While some positions may be attainable with a bachelor's degree, more advanced positions or research-oriented roles may require a master's or doctoral degree.
Additionally, technological advancements, evolving industry standards, and changes in job requirements can also influence the level of education needed for different roles within a profession. As new knowledge and skills become necessary to meet the demands of a changing work environment, additional education and training may be required to stay relevant and competitive in the field.
In summary, different jobs within the same profession can indeed require more or less education depending on factors such as job complexity, specialization, and industry demands. The level of education needed may vary to ensure that individuals possess the necessary knowledge and skills to perform their specific roles effectively.
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How to implement a good holistic performance management
program
Holistic Performance Management is the practice of taking into account the entire employee lifecycle and engaging with employees in various ways to improve performance.
To implement a good holistic performance management program, here are some steps to follow:
1. Set Clear Goals and Expectations: The first step is to define your organization's goals and expectations clearly. It should be specific, measurable, achievable, relevant, and time-bound. You should also make sure that they align with the company's overall strategy.
2. Continuous Feedback: Managers should provide regular feedback and coaching to employees on their performance. The feedback should be timely, relevant, specific, and actionable. It should also be a two-way conversation, where the employee has the opportunity to ask questions, provide feedback, and discuss their challenges.
3. Recognition and Rewards: Holistic Performance Management also involves recognition and rewards. This is an essential part of creating a positive work environment, motivating employees, and driving better performance. The rewards can be monetary or non-monetary and should be based on the employee's individual performance
.4. Employee Development: Holistic Performance Management involves employee development. This involves providing training and development opportunities for employees to improve their skills and knowledge. It can also include career development opportunities, such as mentoring, job shadowing, and job rotations.
5. Performance Review: The final step is to conduct a performance review. This should be done annually, and it should be a comprehensive review of the employee's performance over the past year. It should include feedback from the employee, feedback from peers, and feedback from the manager.
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This is a consumer behavior course
How does consumer behavior foster consumer addiction?
Explain using an example and the perspective of a marketer.
Consumer behavior is the study of consumers' actions and preferences, which is crucial for marketers to comprehend in order to create goods and services that meet consumer needs. Consumer addiction can be fostered by understanding consumer behavior, and marketers may utilize this knowledge to create compelling advertising campaigns or create new and interesting products and services to attract and retain customers.
There are various ways in which consumer behavior fosters consumer addiction. First, marketers often seek to create demand for their products and services, which can lead to consumers developing a dependency on those products or services. This can be achieved through various means, such as product placement, advertising, and promotions. For instance, Coca-Cola has an outstanding advertising campaign, which uses catchy jingles and bright colors to attract customers.Marketers also use psychological methods to appeal to consumers and encourage them to buy more. For instance, the use of bright colors, upbeat music, and attractive packaging are all designed to draw attention to a product. This makes it more likely that a consumer will buy the product, even if it is not something they need or intended to buy.Finally, consumer addiction can be fostered by the use of social media. Marketers can use social media platforms to build customer loyalty and encourage customers to return. By creating a social media presence, they can communicate with customers, offer promotions, and create a sense of community. For example, Starbucks has a strong social media presence, which includes a mobile app that allows customers to order and pay for drinks, and a rewards program that encourages customers to return for more purchases.In conclusion, marketers use consumer behavior to foster consumer addiction by creating demand for their products, using psychological methods, and utilizing social media to build customer loyalty.
Through the creation of compelling advertising campaigns and new and interesting products, marketers can attract and retain customers and create long-term customer relationships.
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Home equity, student, and auto loans are special purpose
consumer loans. Which ones offer the unique benefit of tax
deductibility for interest paid?
Among the special purpose consumer loans mentioned (home equity, student, and auto loans), the unique benefit of tax deductibility for interest paid is typically associated with home equity loans.
Home equity loans, also known as second mortgages, allow homeowners to borrow against the equity they have built in their homes. In some cases, the interest paid on home equity loans may be tax-deductible, subject to certain conditions.It's important to note that tax laws can vary by country and region, and specific regulations may apply. Furthermore, tax deductibility for interest paid on home equity loans might be subject to limitations and changes in tax legislation. Therefore, it is always advisable to consult with a qualified tax professional or financial advisor to understand the current tax regulations and implications that apply to your specific situation.
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Pearl E. White Orthodontist specializes in correcting misaligned teeth. During 2015, Pearl provides services on account of $590,000. Of this amount, $80,000 remains receivable at the end of the year. An aging schedule as of December 31, 2015, is provided below.
Age Group Amount Receivable Estimated Percent Uncollectible
Not yet due $ 40,000 4%
0-90 days past due 16,000 20%
91-180 days past due 11,000 25%
More than 180 days past due 13,000 80%
Total $ 80,000
1. Calculate the allowance for uncollectible accounts.
2. Record the December 31, 2015, adjustment, assuming the balance of Allowance for Uncollectible Accounts before adjustment is $5,000 (credit).
3. On July 19, 2016, a customer�s account balance of $8,000 is written off as uncollectible. Record the write-off.
4. On September 30, 2016, the customer whose account was written off in Part 3 unexpectedly pays the full amount. Record the cash collection.
1. The allowance for uncollectible accounts is $16,600.
2. The December 31, 2015, adjustment for the allowance for uncollectible accounts is a debit of $11,600.
3. The write-off of the customer's account on July 19, 2016, does not affect the allowance for uncollectible accounts.
4. The cash collection on September 30, 2016, is recorded as a debit to Accounts Receivable of $8,000 and a credit to Cash for $8,000.
1. To calculate the allowance for uncollectible accounts, we need to determine the estimated uncollectible amounts for each age group and then sum them up. The calculations are as follows:
Not yet due: $40,000 x 4% = $1,600
0-90 days past due: $16,000 x 20% = $3,200
91-180 days past due: $11,000 x 25% = $2,750
More than 180 days past due: $13,000 x 80% = $10,400
Total allowance for uncollectible accounts = $1,600 + $3,200 + $2,750 + $10,400 = $16,600
2. The adjustment to the allowance for uncollectible accounts on December 31, 2015, is based on the desired ending balance. Given that the balance before adjustment is a credit of $5,000, we need to increase the allowance by the difference. The adjustment is a debit to the allowance for uncollectible accounts of $16,600 - $5,000 = $11,600.
3. Writing off the customer's account on July 19, 2016, does not affect the allowance for uncollectible accounts. It only impacts the customer's accounts receivable balance.
4. When the customer unexpectedly pays the full amount on September 30, 2016, we record it as a debit to Accounts Receivable for $8,000 and a credit to Cash for $8,000.
The calculation of the allowance for uncollectible accounts is based on the estimated percent uncollectible for each age group. The adjustment to the allowance is made to achieve the desired ending balance. Writing off a customer's account does not impact the allowance but affects the accounts receivable balance. Cash collection is recorded as a debit to accounts receivable and a credit to cash. These steps ensure proper accounting treatment for uncollectible accounts and reflect the financial position accurately.
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The next dividend payment by Halestorm, Inc., will be $1.92 per share. The dividends are anticipated to maintain a growth rate of 6 percent forever. If the stock currently sells for $38 per share, what is the required return?
The required return is the amount of return necessary to persuade an investor to invest in a security. The required return on equity is the cost of equity. This is the cost to the firm of the funds obtained from investors in exchange for the issuance of common stock. The cost of equity is the return that equity investors expect on their investment. It is determined by the perceived risk of the investment. As a result, the required return is 12.63 percent.
The required return is the return that an investor needs on an investment to compensate them for the risk of that investment. The return is calculated using the current market price of the stock and the expected future dividends. In this case, the next dividend payment by Halestorm, Inc., will be $1.92 per share, and the dividends are anticipated to maintain a growth rate of 6 percent forever.The formula to calculate the required return is:Required Return = (Dividend Payment / Stock Price) + Growth RateIn this case, the dividend payment is $1.92 per share, and the stock price is $38 per share. The growth rate is 6 percent. Therefore, the required return is:Required Return = ($1.92 / $38) + 0.06Required Return = 0.10 + 0.06Required Return = 0.16 or 16%Therefore, the required return is 16 percent.
In conclusion, the required return is the return that an investor needs on an investment to compensate them for the risk of that investment. The required return on equity is the cost of equity. In this case, the required return is 16 percent, which is the amount of return necessary to persuade an investor to invest in a security.
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Burt's Pastry employs three workers who produce 6 dozen pastries per hour. After Burt hires a fourth worker, the total number of pastries produced increases to 8 dozen per hour. Because the marginal product of the fourth worker is_____ than the average product of three workers, the average product must ___
a less; fall b the same; fall c greater; rise d the same; stay constant
The marginal product of the fourth worker is less than the average product of three workers, so the average product must fall. The correct answer is option a: less; fall.
The marginal product refers to the additional output produced by adding one more unit of input (in this case, hiring an additional worker). In this scenario, when the fourth worker is hired, the total number of pastries produced increases from 6 dozen to 8 dozen per hour. However, since the average product is calculated by dividing the total output by the number of workers, the addition of the fourth worker reduces the average product. This suggests that the fourth worker's contribution is not as significant as the average productivity of the previous three workers, leading to a decline in the average product.
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Which of the following about superannuation funds is NOT correct? Select one: a. For a defined benefit scheme, the amount of the benefit at maturity depends on the investment performance of the fund. b. It is reasonable for a person nearing retirement to change to a conservative asset allocation for their superannuation fund. c. A defined contribution or accumulation fund involves risk for the member as there is no defined payout. d. A capital guaranteed superannuation fund assures contributors that they will at least receive back the value of their investment. e. The majority of fund members make regular contributions to their superannuation fund over their working life.
For a defined benefit scheme, the amount of the benefit at maturity depends on the investment performance of the fund about superannuation funds is NOT correct
In a defined benefit scheme, the amount of the benefit at maturity is typically determined by a specific formula based on factors such as the employee's salary, years of service, and age at retirement. The investment performance of the fund does not directly impact the benefit amount received by the member. The responsibility for managing the investment risk and ensuring the promised benefits lies with the employer or the fund itself, rather than the individual member. Therefore, the correct option is a. For a defined benefit scheme, the amount of the benefit at maturity depends on the investment performance of the fund.
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Some organisations prefer hiring from inside the Company over
external recruitment. Explain five advantages of hiring internal
employees for vacancies. (50 marks)
Some organizations prefer hiring from inside the Company over external recruitment. The five advantages of hiring internal employees for vacancies are cost effective method, better knowledge of organization culture, motivation, reduced training time and improved retention rates.
1. Cost-effective method of recruiting: A significant advantage of hiring from within is the cost savings associated with the recruitment process. External recruitment requires a considerable amount of money to be spent on advertising, screening, testing, and interviewing candidates. However, the internal recruitment process is less time-consuming and expensive.
2. Better Knowledge of Organization and its Culture: Internal candidates are already familiar with the company's culture, policies, and values, which make them better suited for the job. The external candidates may require significant training and orientation, whereas internal candidates can easily adapt to the new role with minimal orientation.
3. Motivation: Internal hiring motivates employees to perform well in their current job because they know that there are growth opportunities within the organization. This creates a positive work environment, which is conducive to productivity.
4. Reduced Training Time: Internal employees require less training compared to external hires. They already have knowledge of the company, its processes, and its operations. This makes the onboarding process quicker and more efficient.
5. Improved Retention Rates: Internal hiring helps retain talented employees within the organization. The employees who see that there are opportunities for growth within the organization are more likely to stay with the company. This, in turn, reduces the employee turnover rate, which can save the company time and money spent on recruitment and training.
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MRP is the common method to determine the dependent demand. By providing MRP advantages. explain dependent demand.
MRP (Material Requirements Planning) is indeed a common method used to determine dependent demand in inventory management. Dependent demand refers to the demand for components or subassemblies that are directly derived from the demand for finished products. In other words, it is the demand for materials or parts that are needed to manufacture or assemble a final product.
Advantages of using MRP to determine dependent demand include:
1. Improved Inventory Management: MRP enables businesses to calculate and plan for the exact quantities of materials needed, minimizing excess inventory and reducing carrying costs. It ensures that the right components are available at the right time, avoiding stockouts and production delays.
2. Enhanced Production Planning: MRP helps in scheduling and coordinating production activities based on the demand for finished products. It assists in optimizing the production process, ensuring that materials are procured and utilized efficiently, leading to improved productivity and on-time delivery.
3. Cost Reduction: By accurately estimating dependent demand, MRP allows organizations to optimize their purchasing and production processes. This optimization leads to cost reduction through better inventory control, reduced waste, improved resource utilization, and streamlined operations.
By using MRP to determine dependent demand, businesses can achieve more efficient production planning, better inventory management, and cost savings.
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MRP (Material Requirements Planning) is indeed a common method used to determine dependent demand in inventory management.
Dependent demand refers to the demand for components or subassemblies that are directly derived from the demand for finished products. In other words, it is the demand for materials or parts that are needed to manufacture or assemble a final product. Advantages of using MRP to determine dependent demand include: Improved Inventory Management: MRP enables businesses to calculate and plan for the exact quantities of materials needed, minimizing excess inventory and reducing carrying costs. It ensures that the right components are available at the right time, avoiding stockouts and production delays.
Cost Reduction: By accurately estimating dependent demand, MRP allows organizations to optimize their purchasing and production processes. This optimization leads to cost reduction through better inventory control, reduced waste, improved resource utilization, and streamlined operations. By using MRP to determine dependent demand, businesses can achieve more efficient production planning, better inventory management, and cost savings.
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On January 1, Ayayai Corp. had 105000 shares of $10 par value common stock outstanding. On March 17 the company declared a 15% stock dividend to stockholders of record on March 20. Market value of the stock was $12 on March 17. The stock was distributed on March 30. The entry to record the transaction of March 30 would include a
debit to Common Stock Dividends Distributable for $157500.
credit to Cash for $157500.
debit to Stock Dividends for $31500.
credit to Paid-in Capital in Excess of Par Value for $31500.
The entry to record the transaction of March 30, which involves the distribution of the stock dividend, would include a debit to Common Stock Dividends Distributable for $157,500. Therefore, the correct option is a).
When a stock dividend is declared, a liability is created called Common Stock Dividends Distributable, which represents the amount of dividend to be distributed to the stockholders.
In this case, the dividend declared is 15% of the total outstanding shares, which is calculated as 105,000 shares * 15% = 15,750 shares. Since the par value of the stock is $10, the dividend amount is $10 * 15,750 shares = $157,500.
Therefore, the correct option is: a) debit to Common Stock Dividends Distributable for $157,500.
This entry reflects the reduction in the liability for the stock dividend that was declared earlier. It indicates that the company is distributing the stock dividend to the stockholders, and the liability is being settled. The entry does not involve any cash transaction as a stock dividend involves the distribution of additional shares rather than cash payments.
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Fast forward to March 2020. The COVID-19 pandemic has hit, and the vast majority of the world is under quarantine. Travel has plummeted, and millions of your customers are canceling their flight reservations. Your fleet sits largely dormant and company debts are piling up quickly.
As CEO of American Airlines, your list of concerns is essentially endless right now. You sit down to gather your thoughts on some of the most pressing issues at hand. Address the following legal issues as instructed.
In light of the COVID-19 pandemic, as CEO of American Airlines, I am addressing the following legal concerns.
The COVID-19 pandemic has presented several legal challenges for American Airlines. One significant concern is the issue of customer cancellations and refunds. With travel restrictions and quarantine measures in place, millions of customers are canceling their flight reservations, resulting in a substantial number of refund requests. As the CEO, I need to ensure that our refund policies and procedures are in compliance with applicable laws and regulations, such as the Department of Transportation's rules on airline refunds. We must handle these refund requests promptly and fairly, while also managing our financial resources during this crisis.
Another legal issue that arises during this time is the contractual obligations with suppliers, lessors, and creditors. With the fleet largely dormant, we may face difficulties in meeting our financial obligations and lease agreements. It is crucial for us to review and potentially renegotiate these contracts to mitigate the impact of the pandemic on our finances. Additionally, we need to assess our compliance with labor laws and regulations to ensure the well-being and safety of our employees during this challenging period. This includes addressing concerns such as workplace safety measures, employee benefits, and potential labor disputes. As the CEO, I will work closely with legal counsel and relevant stakeholders to navigate these legal challenges and protect the interests of American Airlines and its stakeholders.
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Active listening question 2
options:
lets a client know that you are really listening to him or her.
requires that you accurately record all of the information that a client tells you.
is not appropriate in client interviews.
is not considered an ethical practice
Active-listening is a communication skill that requires actively engaging with a client to demonstrate understanding and attentiveness.
Active listening involves fully focusing on the client, paying attention to verbal and non-verbal cues, and providing feedback to show that you are genuinely interested and understanding their perspective. It includes techniques such as maintaining eye contact, nodding, summarizing key points, and asking clarifying questions.
While accurate record-keeping is important in client interactions, active listening goes beyond simply recording information. It involves creating a supportive and empathetic environment where the client feels heard and valued.
Active listening is considered an ethical and effective practice in client interviews and various professional contexts. It helps build rapport, trust, and understanding, which are essential for effective communication and problem-solving.
Active listening is a valuable skill in client interactions as it demonstrates attentiveness, understanding, and empathy. It goes beyond record-keeping and involves actively engaging with the client to create a supportive environment. It is considered an ethical and effective practice that promotes effective communication and client satisfaction.
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You have been made the purchasing manager of a local restaurant. This restaurant is part of a chain of locally‐owned restaurants that has steadily grown since 2005. Currently, there are 6 restaurants located in Durban, Cape Town, and Pretoria. Answer the following questions with your application to your new role.
Q.1 Indicate whether your local restaurant should follow a centralised‐; decentralised ‐ or combined purchasing and supply organisational structure. Choose 1 and justify your opinion by discussing at least three key points
Answer:
In my opinion, the local restaurant should adopt a combined purchasing and supply organizational structure. This structure combines elements of both centralized and decentralized approaches, allowing for a balance between efficiency and local responsiveness. Here are three key points justifying this choice:
Explanation:
Standardization and Cost Efficiency: A centralized purchasing function enables the restaurant chain to leverage economies of scale by consolidating purchasing activities. By centralizing purchasing decisions for common items such as ingredients, kitchen equipment, and supplies, the chain can negotiate better prices, establish long-term contracts, and benefit from volume discounts. This approach promotes cost efficiency and ensures consistent quality and pricing across all locations.
Local Adaptability and Responsiveness: While centralization offers advantages in terms of cost control, a completely centralized structure may limit the ability to respond to local market needs and preferences. By incorporating a decentralized element, such as regional or site-level procurement responsibilities, the local restaurant can maintain flexibility in sourcing products specific to their respective markets. This allows for adaptation to regional tastes, local suppliers, and seasonal variations. Decentralization also promotes quicker decision-making and responsiveness to supply disruptions or market fluctuations at the local level.
Knowledge Sharing and Collaboration: A combined structure encourages collaboration and knowledge sharing between the centralized and decentralized procurement teams. The centralized procurement team can provide expertise in strategic sourcing, supplier management, and negotiation, while the decentralized teams bring insights into local market dynamics, supplier relationships, and specific requirements. This exchange of information facilitates continuous improvement, best practice sharing, and innovation across the restaurant chain.
By adopting a combined purchasing and supply organizational structure, the local restaurant can benefit from centralized cost control and standardization while maintaining flexibility and responsiveness to local market needs. This approach strikes a balance between efficiency and adaptability, ensuring the restaurant chain's growth and success in multiple locations.
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Please give me the introduction, probelm, solution and summary of
Elijah gold in restaurant case study for presentation.
Introduction: Elijah Gold is the proprietor of Gold’s Cafe, a popular casual dining establishment in midtown.
Problem: The Gold Cafe is having difficulty attracting customers during the lunch hour.
Solution: Elijah and his team implemented a few measures to increase lunchtime sales. First, they expanded their lunch menu to include a wider range of options, such as soups, salads, and sandwiches. They also launched a lunchtime delivery service, which allowed customers to order from the comfort of their office. Finally, they invested in marketing, including social media campaigns and targeted ads, to increase awareness of the cafe's lunch offerings.
Summary: In conclusion, Elijah Gold recognized the challenge his cafe faced and implemented several solutions to address it.
Introduction:
The Elijah Gold restaurant case study revolves around a fictional restaurant facing various challenges in its operations. This presentation aims to analyze the problems encountered by Elijah Gold and propose potential solutions to improve its performance. By examining the restaurant's issues and offering effective solutions, we can gain insights into the importance of strategic decision-making and operational efficiency in the competitive food industry.
Problem:
Elijah Gold restaurant is currently facing several challenges that are hindering its success. These problems include declining customer satisfaction, increasing competition, rising costs, and inefficient operations. The restaurant's reputation is at stake, and immediate action is required to address these issues and ensure long-term sustainability.
Solution:
To overcome the challenges faced by Elijah Gold, the following solutions are proposed:
Enhancing Customer Experience: Implementing measures to improve customer satisfaction is vital. This can be achieved by training staff to deliver exceptional service, providing personalized experiences, and actively seeking and addressing customer feedback. By focusing on customer needs and preferences, the restaurant can build a loyal customer base.Streamlining Operations: Conducting a thorough operational analysis is necessary to identify inefficiencies and bottlenecks. Implementing technology solutions such as a POS system, online reservation system, or inventory management software can streamline processes, reduce errors, and improve overall efficiency. Employee training programs can also ensure smooth operations and standardized service.Menu Revamp and Competitive Pricing: Reviewing the menu offerings and pricing strategy is crucial to stay competitive in the market. Conduct market research to understand customer preferences and trends, and revamp the menu accordingly. Analyze pricing strategies to ensure they are both competitive and profitable, considering the cost of ingredients and customer expectations.Marketing and Branding: Strengthening the restaurant's brand image and implementing effective marketing strategies can help attract new customers and retain existing ones. Utilize social media platforms, engage in influencer partnerships, and create appealing promotions to increase brand visibility and generate interest.Summary:
In summary, the Elijah Gold restaurant case study highlights the challenges faced by the establishment and proposes potential solutions to overcome them. By prioritizing customer satisfaction, streamlining operations, revising the menu and pricing, and implementing effective marketing strategies, Elijah Gold can position itself for success in a highly competitive industry. Taking proactive steps to address these issues will not only enhance the restaurant's reputation but also pave the way for long-term growth and profitability.
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you have a $300,000 30-year FRM at 3.5% and can refinance it at 3%. Assuming refinancing costs are $7,000, how long would you need to stay in your home to make the payment savings worthwhile? 75 months 95 months 05 months 105 months QUESTION 20 If I bought an MBS with a CPR of 52.41 at a 4% discount, what is my approximate P&L impact? 14 cent loss 24 cent loss 14 cent gain 24 cent gain 30x40
You have a $300,000 30-year FRM at 3.5% and can refinance it at 3%. Assuming refinancing costs are $7,000, how long would you need to stay in your home to make the payment savings worthwhile?
The total savings per year due to refinancing can be calculated using the given information.Savings = $300,000 × (3.5% - 3.0%) = $1,500 per yearRefinancing costs = $7,000The length of time required to make the refinancing worthwhile can be calculated using the following formula:Time = Refinancing costs ÷ Annual savingsTime = $7,000 ÷ $1,500Time = 4.67 years, which is approximately 56 months or 5 years. Therefore, the answer is 05 months.Question 2:The price of an MBS is affected by interest rates and prepayment rates.
CPR (Constant Prepayment Rate) is the rate at which a mortgage-backed security's outstanding principal balance is expected to prepay in a given year.The formula for calculating the P&L impact of an MBS is given below:Profit or Loss = MBS price × CPR × 100Approximate P&L impact = (4% × 52.41 × $100) ÷ 100 = $2.08 or 24 cent gain Therefore, the answer is 24 cent gain.
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Most nations of the world experience are facing an upward pressure on the prices of the majority of goods in the consumer basket. This inflation varies from 5 % to more than 8.5 % on average in the US. Can you list the main causes(variables or factors) of this inflation? Explain why the factors you list are real causes of the US current inflation. 2. How can this inflation affect the gross domestic product in the US?
inflation can have adverse effects on GDP by influencing consumer behavior, business profitability, investment decisions, and overall economic stability.
1. Main causes of inflation in the US:
a) Increase in aggregate demand: Higher consumer spending and investment can lead to increased demand for goods and services, putting upward pressure on prices.
b) Supply chain disruptions: Disruptions in the global supply chain, such as shortages of raw materials or disruptions in transportation, can lead to increased production costs and higher prices.
c) Higher energy and commodity prices: Increases in the prices of energy resources and commodities, such as oil and metals, can directly impact production costs and result in inflationary pressures.
d) Wage increases: Rising wages can lead to higher production costs, which are often passed on to consumers in the form of higher prices.
e) Government policies and fiscal stimulus: Expansionary fiscal policies, such as increased government spending or tax cuts, can boost aggregate demand and potentially contribute to inflationary pressures.
These factors are considered real causes of inflation in the US because they have a direct impact on the supply and demand dynamics in the economy. Increased demand, disruptions in the supply chain, higher production costs, rising wages, and government policies all affect the overall price level. As prices rise, consumers may experience a decrease in purchasing power and businesses may face higher costs, which can lead to a cycle of inflationary pressures.
2. Impact of inflation on GDP in the US:
Inflation can affect the gross domestic product (GDP) in several ways:
a) Reduced purchasing power: When prices rise, consumers may reduce their spending on goods and services, leading to lower consumption expenditure, which is a component of GDP.
b) Increased production costs: Inflation can increase the costs of raw materials, labor, and other inputs for businesses, reducing their profit margins and potentially discouraging investment and expansion, which can impact GDP growth.
c) Monetary policy adjustments: To control inflation, central banks may raise interest rates, which can lead to higher borrowing costs for businesses and households. This can dampen investment and consumption, impacting GDP growth.
d) Uncertainty and market volatility: High inflation rates can create economic uncertainty, impacting business and consumer confidence. Uncertainty may result in reduced investment and economic activity, affecting GDP.
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If the annual percentage rate of return (APR) on a credit card that you carry is 18 percent and if interest is compounded monthly, what is the effective, or true, annual rate (EAR) charged by the credit card company?
A. 18.00%
B. 26.82%
C. 19.56%
D. 20.00%
When interest is compounded monthly, the effective annual rate (EAR) is higher than the annual percentage rate (APR) due to the compounding effect is 19.56%.
To calculate the EAR, we can use the formula:
EAR = (1 + APR/n)^n - 1
where APR is the annual percentage rate and n is the number of compounding periods per year.
In this case, the APR is 18% and interest is compounded monthly, so n = 12.
Plugging in the values, we have:
EAR = (1 + 18%/12)^12 - 1 = (1 + 0.015)^12 - 1 ≈ 0.1986
Converting the decimal to a percentage, the effective annual rate charged by the credit card company is approximately 19.86%.
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QUESTION 5 Using Porter's 5 Forces Model, would you rate McDonald's High or Low for Bargaining Power of Buyers? High Low
Using Porter's Five Forces Model, the Bargaining Power of Buyers refers to the influence that customers have on a company and its pricing and terms.
Considering this, I would rate McDonald's as low for the Bargaining Power of Buyers.
McDonald's operates in the fast-food industry where customers have a wide range of options and alternatives. However, McDonald's brand recognition, global presence, and extensive customer base provide them with a certain level of insulation from excessive buyer power. Customers may have some influence on pricing and menu offerings, but McDonald's has established a strong market position and a loyal customer base that allows them to maintain their pricing and profitability.
Additionally, McDonald's offers a standardized menu and value meals, which provide customers with consistent pricing and a perceived level of affordability. The company also invests in advertising and promotional activities to maintain customer loyalty and attract new customers. These factors further reduce the bargaining power of individual buyers.
Overall, while customers have choices in the fast-food industry, McDonald's low-cost structure, brand reputation, and customer loyalty contribute to a lower bargaining power of buyers.
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Anwar and Rana have just borrowed $220,000 to purchase a home. The bank gave them a 8% interest rate on a 20 year mortgage. How much will their monthly mortgage payments be?
To calculate the monthly mortgage payments, we can use the formula for calculating the fixed monthly payment for a mortgage: P = (P0 * r * (1 + r)^n) / ((1 + r)^n - 1).
Where: P = Monthly payment. P0 = Loan amount m = Monthly interest rate (annual interest rate divided by 12) n = Total number of monthly payments (number of years multiplied by 12) Given: Loan amount (P0) = $220,000. Annual interest rate = 8%. Number of years (n) = 20. First, we need to calculate the monthly interest rate (r): Monthly interest rate (r) = Annual interest rate / 12. r = 8% / 12 = 0.08 / 12 = 0.00667. Now, we can calculate the monthly mortgage payment (P): P = (220,000 * 0.00667 * (1 + 0.00667)^(2012)) / ((1 + 0.00667)^(2012) - 1). P = (220,000 * 0.00667 * (1 + 0.00667)^240) / ((1 + 0.00667)^240 - 1). Using a calculator, the monthly mortgage payment (P) comes out to be approximately $1,677.71. Therefore, Anwar and Rana's monthly mortgage payments will be approximately $1,677.71.
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If the market price equaled exist10, in the short run this firm should Produce where the ATC is at a minimum. Shutdown. Raise the price. Produce with an economic loss.
If the market price equals exist10, then the firm should produce where the ATC is at a minimum. The firm should produce with an economic loss in the short run.What is the short run?Short run is a period of time in which at least one factor of production is fixed and the company is unable to alter its production level.
In a short period of time, it is not always feasible to alter plant capacity or other fixed factors of production, therefore production is limited, and firms must operate within the limitations of their fixed production factors. Some of the short run possibilities that a company may face include producing with economic losses or shutting down operations.How should a firm operate in the short run?In the short run, a company should aim to make as much profit as possible.
Firms should produce where the ATC (Average Total Cost) is at a minimum and the firm should produce with an economic loss if the market price equals exist10. This occurs when the firm's average total cost curve is above the market price but still below the demand curve. However, when the market price falls below the average variable cost, the firm will close down temporarily to prevent any further losses.
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A stock just paid an annual dividend of $2. The dividend is expected to grow by 10% per year for the next 3 years. The growth rate of dividends will then fall steadily (linearly) from 10% after 3 years to 7% in year 6. The required rate of return is 12%. What is the stock price if the dividend growth rate will stay 0.07 (7%) forever after 6 years? In 6 years, the P/E ratio is expected to be 25 and the payout ratio to be 80%. What is the stock price when using the P/E ratio?
The stock price using the P/E ratio is $45.07.
To calculate the stock price using the dividend growth model, we need to find the present value of the dividends and the terminal value.
First, let's calculate the present value of the dividends for the first 6 years:
Year 1: Dividend = $2, Growth rate = 10%
Year 2: Dividend = $2 * (1 + 10%) = $2.20, Growth rate = 10%
Year 3: Dividend = $2.20 * (1 + 10%) = $2.42, Growth rate = 10%
Year 4: Dividend = $2.42 * (1 + 7%) = $2.59, Growth rate = 7%
Year 5: Dividend = $2.59 * (1 + 7%) = $2.77, Growth rate = 7%
Year 6: Dividend = $2.77 * (1 + 7%) = $2.97, Growth rate = 7%
Next, let's calculate the present value of the dividends for the first 6 years using the required rate of return of 12%:
PV = Dividend / (1 + r)^n
PV1 = $2 / (1 + 12%)^1 = $1.79
PV2 = $2.20 / (1 + 12%)^2 = $1.71
PV3 = $2.42 / (1 + 12%)^3 = $1.64
PV4 = $2.59 / (1 + 12%)^4 = $1.49
PV5 = $2.77 / (1 + 12%)^5 = $1.35
PV6 = $2.97 / (1 + 12%)^6 = $1.22
Now, let's calculate the terminal value using the constant growth rate of 7%:
Terminal Value = Dividend at year 7 / (r - g)
Dividend at year 7 = $2.97 * (1 + 7%) = $3.18
Terminal Value = $3.18 / (12% - 7%) = $63.60
To calculate the stock price, we sum up the present value of the dividends and the terminal value:
Stock Price = PV1 + PV2 + PV3 + PV4 + PV5 + PV6 + Terminal Value
Stock Price = $1.79 + $1.71 + $1.64 + $1.49 + $1.35 + $1.22 + $63.60
Stock Price = $72.80
Therefore, the stock price using the dividend growth model is $72.80.
Now let's calculate the stock price using the P/E ratio in 6 years.
Expected EPS in 6 years = Dividend at year 6 / Payout ratio = $2.97 / 80% = $3.71
Expected Stock Price in 6 years = P/E ratio * Expected EPS = 25 * $3.71 = $92.75
To find the present value of the stock price, we need to discount it back to the present using the required rate of return of 12% for 6 years:
PV of Stock Price = Expected Stock Price / (1 + r)^n
PV of Stock Price = $92.75 / (1 + 12%)^6 = $45.07
Therefore, the stock price using the P/E ratio is $45.07.
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