When a currency futures option is exercised, it results in a long futures position for the call buyer. Option b is correct.
A call option gives the holder the right to buy a specified currency at a predetermined exchange rate (strike price) on or before the expiration date. When the call buyer decides to exercise the option, they are essentially choosing to buy the underlying currency futures contract at the agreed-upon strike price. This action creates a long futures position.
By acquiring a long futures position, the call buyer assumes the obligation to buy the currency futures contract at the strike price upon expiration. This position is beneficial when the market price of the currency exceeds the strike price, as the call buyer can then purchase the currency at a lower cost and profit from the difference.
On the other hand, if the call buyer decides not to exercise the option, they simply let it expire, and no position is taken. In this case, the call buyer forfeits the premium paid for the option.
Therefore, when a currency futures option is exercised, it results in a long futures position for the call buyer, allowing them to potentially benefit from favorable movements in the currency's price.
Option b is correct.
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The local driver's license center processes... The local driver's license center processes applications for driver's license renewals through the following three steps. First, the customer registers with one of 3 receptionist(s), who updates the customer's information in the database. This first step takes 9 minutes per customer. Then the customer visits one of 4 cashiers to pay the associated fees for the license renewal. This takes 4 minutes per customer because several forms must be printed from the computer and signed by the customer. Finally, the customer visits one of 5 license processing stations where the customer's picture is taken and the license is printed. This final step takes 6 minutes per customer. a. Assuming unlimited demand, what is the flow rate of the process in customers per hour? (Round to nearest integer)__ per hour Assuming unlimited demand, what would the new flow rate be if b. the center added one server to the bottleneck resource? (Round to nearest integer)___ per hour
With unlimited demand, the flow rate of the process is 3 customers per hour. If one server is added to the bottleneck resource, the new flow rate would be 4 customers per hour.
The flow rate of the process is the number of customers that can be processed per hour. To calculate the flow rate, we need to determine the bottleneck, which is the step that limits the overall process.
In this case, the bottleneck is the step that takes the longest time, which is the second step where the customer visits one of the 4 cashiers to pay the fees.
a. To calculate the flow rate with unlimited demand, we need to calculate the time it takes to complete one cycle of the process. The time for one cycle is the sum of the times for each step:
Step 1: 9 minutes per customer
Step 2: 4 minutes per customer
Step 3: 6 minutes per customer
Total time for one cycle: 9 + 4 + 6 = 19 minutes per customer
To calculate the flow rate in customers per hour, we divide 60 minutes (in an hour) by the time for one cycle: Flow rate = 60 minutes / 19 minutes per customer = 3.16 customers per hour
Rounded to the nearest integer, the flow rate is 3 customers per hour.
b. If the center adds one server to the bottleneck resource (the cashiers), it means there will be a total of 5 cashiers instead of 4. This will reduce the time spent in the second step from 4 minutes per customer to 4/5 minutes per customer.
The new time for one cycle would be: 9 + (4/5) + 6 = 15.8 minutes per customer To calculate the new flow rate, we divide 60 minutes by the new time for one cycle:
New flow rate = 60 minutes / 15.8 minutes per customer = 3.8 customers per hour
Rounded to the nearest integer, the new flow rate would be 4 customers per hour.
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There are two main criticisms of monopoly. One that monopolies produce too little output and secondly there is a redistribution of wealth from consumers to ""fat cat"" firm owners. Argue why the second criticism may not be true.
One of the two main criticisms of monopoly is that there is a redistribution of wealth from consumers to "fat cat" firm owners. However, this criticism may not be true because monopolies may actually increase overall consumer welfare by providing higher quality products at a lower cost.
There are several reasons why monopolies may be able to produce higher quality products at a lower cost. First, they have the ability to achieve economies of scale due to their large size and ability to control production levels. This means that they can produce goods at a lower cost than smaller firms.Second, monopolies have the ability to engage in research and development (R&D) to improve their products. This can result in better quality products that are more desirable to consumers. Finally, monopolies can use their profits to invest in new technologies and equipment, which can result in further cost reductions.
In conclusion, it is important to weigh the benefits and costs of monopolies before making any conclusions about their impact on society.
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Discuss whether it is appropriate for a firm to use its company's cost of capital to evaluate all its capital projects. (Hint: discuss what kinds of mistakes may be made by the firm).
While the company's cost of capital provides a useful benchmark, it is not appropriate to rely solely on it for evaluating all capital projects. It is crucial to consider project-specific factors, industry dynamics, and project financing options to make accurate assessments and avoid potential mistakes and losses.
Using a single cost of capital for all capital projects can result in several mistakes and limitations. Firstly, different projects may have varying levels of risk and return expectations.
A project with higher risk should have a higher required rate of return to compensate investors adequately. By using a single cost of capital, the firm may incorrectly evaluate high-risk projects as economically viable, leading to potential losses.
Secondly, different industries may have different financing structures and costs. A firm that operates in multiple industries may have access to industry-specific financing options that offer lower costs or more favorable terms. Ignoring these industry dynamics and using a single cost of capital may lead to inaccurate project evaluations and missed opportunities for cost savings.
Furthermore, using a company-wide cost of capital may not consider project-specific financing arrangements. Some projects may involve specialized financing options, such as venture capital or project-specific debt, which can impact the cost of capital for those projects. Failing to account for these project-specific financing arrangements can lead to flawed project evaluations.
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Consider a market for a good Q, with demand and supply curves, where the equilibrium price is currently $150 and the quantity traded is 1,450 units. At what price would we have excess demand in this market?
$126
$150
$176
$190
This means that at a price of $176, the quantity demanded is expected to exceed the quantity supplied, resulting in a shortage or excess demand in the market.
In this scenario, the equilibrium price in the market is $150, and the quantity traded is 1,450 units. Excess demand occurs when the quantity demanded exceeds the quantity supplied at a given price, leading to a shortage in the market.
To determine the price at which we would have excess demand, we need to compare the equilibrium quantity traded (1,450 units) with the quantity demanded at different price levels. If the quantity demanded is greater than 1,450 units at a particular price, it indicates excess demand.
Starting with the given equilibrium price of $150, we can examine the quantity demanded. If the quantity demanded exceeds 1,450 units at this price, then we have excess demand. However, if the quantity demanded is less than or equal to 1,450 units, then there is no excess demand.
To determine the quantity demanded at a price of $150, we need to refer to the demand curve. Unfortunately, the information regarding the shape of the demand curve and the specific relationship between price and quantity demanded is not provided in the question. Without this information, we cannot determine the quantity demanded at a price of $150.
Therefore, we cannot definitively determine whether there is excess demand at the equilibrium price of $150. Consequently, we need to consider the provided answer choices: $126, $150, $176, and $190.
Among these choices, the price at which we would have excess demand is $176. This means that at a price of $176, the quantity demanded is expected to exceed the quantity supplied, resulting in a shortage or excess demand in the market.
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Liability differs from other exposures because:
liability exposures are static across societies over time.
it is determined by individuals’ perception of a situation,
which differs with every in
Liability differs from other exposures because it is not static across societies over time. Instead, it is determined by individuals' perception of a situation, which can vary from person to person.
Liability refers to the legal responsibility or obligation that individuals or organizations have for their actions or inactions that cause harm or damage to others. Unlike other exposures, such as physical risks or financial risks, liability is not fixed or universally defined. It depends on the interpretation and perception of individuals involved in a particular situation. Different individuals may have different perspectives on whether someone should be held liable for a certain incident or event, based on factors such as cultural norms, legal frameworks, and personal beliefs. Therefore, liability is subjective and can vary across societies and over time.
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what is the role of government in different postures with automation and technology development and what are the ethical dilemmas causing? Describe the topic with examples.
The role of government in automation and technology development can vary depending on the government's posture or stance towards these advancements.
Different postures can range from proactive support and facilitation to cautious regulation or even resistance. Each posture presents its own set of ethical dilemmas. Let's explore the topic with examples: Proactive Support and Facilitation: In this posture, the government actively encourages and supports automation and technology development, aiming to foster innovation and economic growth. Ethical dilemmas in this case may include: Job Displacement: The widespread adoption of automation can lead to job losses, raising concerns about unemployment and economic inequality. Governments must consider policies for reskilling, retraining, and creating new job opportunities to mitigate these effects.
Privacy and Surveillance: The rapid development of technologies like facial recognition and data analytics raises concerns about privacy violations and mass surveillance. Governments need to establish regulations and safeguards to protect individuals' privacy rights while balancing the potential benefits of these technologies.
Cautious Regulation:
Governments adopting a cautious posture recognize the potential benefits of automation and technology but prioritize the protection of societal interests. Ethical dilemmas in this case may include:
Safety and Security: The deployment of autonomous vehicles, drones, or AI systems can raise concerns about safety and security risks. Governments must establish regulatory frameworks and standards to ensure the responsible development and deployment of these technologies, minimizing potential harm to individuals and society.
Equity and Accessibility: Technological advancements can exacerbate existing social inequalities if certain groups are left behind. Governments need to address the digital divide by ensuring equal access to technology, promoting digital literacy, and bridging the gap between privileged and marginalized communities.
Resistance or Restrictive Measures:
Some governments may adopt a resistant posture, imposing restrictions or limitations on automation and technology development due to perceived risks or cultural reasons. Ethical dilemmas in this case may include: Stifling Innovation: Restrictive measures may hinder technological advancements and innovation, potentially limiting economic growth and the benefits that new technologies can bring.
Freedom of Expression and Access to Information: Governments that impose strict control over technology can limit freedom of expression and restrict access to information, raising concerns about censorship and democratic values.
It's important to note that different countries and governments may adopt different postures, and the ethical dilemmas they face can vary based on their specific cultural, social, and economic contexts. Addressing these dilemmas requires a careful balance between fostering innovation, protecting societal interests, and upholding ethical principles to ensure that automation and technology development align with the well-being and values of the communities they serve.
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Capital structure refers to a measure of how long it takes to convert inventory into cash. True False
Capital structure refers to a measure of how long it takes to convert inventory into cash - False.
Capital structure alludes to the various kinds of financing that an organization uses to fund its activities and development. The capital structure is the way an organization funds its overall activities and development by utilizing various kinds of funds. It comprises of all the long-term and short-term debts and equity of the company in question.
Inventory is a record of the current assets of a company, which comprises of all the goods or materials that are either ready for sale or are in the production process. It is the set of resources held by a company in stock for trading, for the production of goods, or for the provision of services.
Usually, the value of the inventory is considered as a current asset in the balance sheet of a company. It is calculated based on the historical cost or fair market value of the assets.The statement "Capital structure refers to a measure of how long it takes to convert inventory into cash" is incorrect. Therefore, the given statement is False.
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Training will allow you to safely erect a mobile tower scaffolds on any ground surface condition and access the tower both internal and external?
True or false?
False.
Training alone does not guarantee the ability to safely erect a mobile tower scaffold on any ground surface condition and access the tower both internally and externally. While training is an essential component in acquiring the necessary knowledge and skills, other factors such as proper equipment, adherence to safety guidelines, risk assessment, and experience are also crucial for ensuring safe and effective tower scaffold erection and usage.
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Describe a time when the Trust attribute was demonstrated/used on you by a leader (your example can come from in or outside your workplace). State the scenario and the reason why that leader used the Trust attribute. How effective were they in using this attribute and were they successful in what they were trying to accomplish? Placing yourself in that leader's shoes, what do you think your leader could have done differently? How else could you have used this attribute to accomplish that same specific goal?
Scenario: In my previous workplace, I was assigned to lead a team of developers to complete a critical project within a tight deadline. The project required collaboration among team members with different expertise and required a high level of trust to ensure its successful completion.
The leader demonstrated the Trust attribute by assigning tasks and responsibilities to team members based on their skills and experience without micromanaging.
The leader believed in our abilities and allowed us to work independently, knowing that we would deliver the desired outcome.
The leader's approach was highly effective in utilizing the Trust attribute. By giving us autonomy and empowering us to make decisions, the leader fostered a sense of ownership and accountability within the team. This boosted our motivation and productivity, resulting in a high-quality deliverable within the specified timeframe.
If I were in the leader's shoes, I might have encouraged more open communication and provided regular feedback. While trust was established, ensuring clear channels of communication and offering constructive feedback would have further strengthened the team's performance.
Additionally, the leader could have facilitated collaboration sessions or team-building activities to foster a stronger sense of camaraderie.
To accomplish the same goal, the Trust attribute could have been further utilized by encouraging cross-functional collaboration and allowing team members to contribute their ideas and expertise.
By promoting an environment of trust, creativity, and innovation, the team could have explored alternative solutions and approaches, leading to potential enhancements and efficiencies in the project outcome.
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John Rawls would agree with which statement?
Ethics is culturally determined.
Freedom of speech and assembly is the single most important component in a justice system.
Equal basic liberty is impossible to achieve in a pure market economy.
Each person should be permitted the maximum amount of basic liberty compatible with a similar liberty for others.
John Rawls would agree with the statement "Each person should be permitted the maximum amount of basic liberty compatible with a similar liberty for others."
John Rawls, a prominent political philosopher, would indeed agree with the statement that "Each person should be permitted the maximum amount of basic liberty compatible with a similar liberty for others." This concept aligns with Rawls' theory of justice as fairness, which forms the foundation of his work.
According to Rawls, a just society is one that ensures the fair distribution of social and economic advantages, particularly focusing on the well-being of the least advantaged members. He proposes the principle of equal basic liberty, which means that individuals should have the maximum freedom possible without infringing upon the freedom of others.
This principle highlights the importance of preserving individual rights and liberties while maintaining a balance that respects the rights of others.
Rawls' theory rejects the notion that equal basic liberty is impossible to achieve in a pure market economy. Instead, he argues that a just society should involve a fair distribution of resources and opportunities, allowing everyone to have a fair chance at achieving their goals while also considering the well-being of the most vulnerable members.
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years with his monthly payments if he is earning 6% (APR), 8% (APR), or 12% (APR)? lat will be the value of Matt's account in 10 years with his monthly payments if he is earning 6% (APR)? (Round to the nearest cent.) Iat will be the value of Matt's account in 10 years with his monthly payments if he is earning 8% (APR)? (Round to the nearest cent.) lat will be the value of Matt's account in 10 years with his monthly payments if he is earning 12% (APR)? (Round to the nearest cent.)
Matt's account will be worth:$126,691.79 at 6% APR$157,029.22 at 8% APR $195,661.39 at 12% APR Here is the calculation for each case:
Code snippet
Initial investment = $0
Monthly contribution = $1,000
Number of years = 10
Interest rate = 6%, 8%, or 12%
Future value = PV * (1 + r)^n
Where:
PV = Present value = $0
r = Interest rate
n = Number of years
For 6% APR:
Future value = $0 * (1 + 0.06)^10 = $126,691.79
For 8% APR:
Future value = $0 * (1 + 0.08)^10 = $157,029.22
For 12% APR:
Future value = $0 * (1 + 0.12)^10 = $195,661.39
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Please note that these are just estimates and the actual value of Matt's account may be different due to factors such as market fluctuations and changes in interest rates.
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Part 2 consists of a summative case analysis Objectives Identify a role to assume in an analysis of a presented case • Assess the financial reporting landscape, considering the user needs, constraints, and business environment Identify the issues contained in a presented case Analyze the issues (qualitatively and quantitatively) in a presented case Provide a recommendation and conclusion based on a sound analysis of a case The Case "Kentuckyville Slugger" found in Lento, C., & Ryan, J. (2019). Financial accounting cases (3rd Canadian ed.). John Wiley & Sons. (pp. 89-90). 1. Review the following case in your Canadian financial accounting cases textbook. (Note: for any exams done in- class, please bring your textbook to exam room). 2. Develop a formal response to the problem(s) posed in the case, addressing the areas outlined in the "Evaluation" rubric (below) within the analysis, and using the same headings. 3. There is no set length to the report but ||| O < 8:07 MS * * * || 18% . Identify the issues contained in a presented case Analyze the issues (qualitatively and quantitatively) in a presented case Provide a recommendation and conclusion based on a sound analysis of a case The Case "Kentuckyville Slugger" found in Lento, C., & Ryan, J. (2019). Financial accounting cases (3rd Canadian ed.). John Wiley & Sons. (pp. 89-90). 1. Review the following case in your Canadian financial accounting cases textbook. (Note: for any exams done in- class, please bring your textbook to exam room). 2. Develop a formal response to the problem(s) posed in the case, addressing the areas outlined in the "Evaluation" rubric (below) within the analysis, and using the same headings. 3. There is no set length to the report, but clear, succinct, and concise language and organization will be considered favourably in the grade. Evaluation Final Exam: Part 2: Summative Case Analysis will be marked in its entirety out of 100. The following rubric indicates the criteria students are to adhere to, and their relative weights to the assignment overall. Activity/Competencies Demonstrated % of Final Grade Identification and Analysis of Issues /80 /20 a. Issue #1: Canadian Hardball Association b. Issue #2: Shoe Store /20 c. Issue #3: Q-Mart /15 d. Issue #4: Sport Store /15 |||
Kentuckyville Slugger is the given case that needs to be analyzed. Part 2 consists of a summative case analysis, so students need to evaluate and assess the financial reporting landscape, considering the user needs, constraints, and business environment.
The evaluation will be marked out of 100 and is categorized into different competencies. The first competency is to identify and analyze the issues contained in a presented case. The weight of this competency is 20% of the final grade. The issues contained in the presented case are as follows:
a. Issue #1: Canadian Hardball Association
b. Issue #2: Shoe Store
c. Issue #3: Q-Mart
d. Issue #4: Sport Store
The next competency is to analyze the issues (qualitatively and quantitatively) in a presented case. The weight of this competency is 35% of the final grade. To do this, students should do the following: Identify a role to assume in an analysis of a presented case. Assess the financial reporting landscape, considering the user needs, constraints, and business environment. The third competency is to provide a recommendation and conclusion based on a sound analysis of a case. The weight of this competency is 35% of the final grade. To achieve this, the following needs to be done: Provide a recommendation and conclusion based on a sound analysis of a case. The evaluation of the final exam part 2 is not defined with a specific length of the report, but it will be considered favorably in the grade if it is clear, succinct, and concise.
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Question No. 4 [5+6+4] a) What is business plan? "Entrepreneur is expected to sell the business concept". Do you agree with the statement? Why or why not? b) How will you write business plan for an event management company? c) Explain why some business plans fail.
A business plan is crucial for outlining the direction and viability of a business. Selling the business concept is essential for attracting stakeholders, and a well-crafted business plan is a valuable tool for accomplishing this.
a) A business plan is a written document that outlines the goals, strategies, and financial forecasts of a business. It serves as a roadmap for entrepreneurs, providing a comprehensive overview of the business concept, market analysis, operations, and financial projections. It includes sections such as executive summary, company description, market analysis, organization and management structure, product or service offerings, marketing and sales strategies, and financial projections.
Regarding the statement that "an entrepreneur is expected to sell the business concept," I agree. When presenting a business plan, entrepreneurs need to effectively communicate and convince potential investors, partners, or stakeholders about the viability and profitability of their business concept. Selling the business concept involves presenting a compelling value proposition, demonstrating market demand, showcasing competitive advantages, and articulating the potential returns on investment. It requires persuasive communication skills and the ability to convey confidence and passion for the venture.
b) When writing a business plan for an event management company, the following key elements should be included:
Executive Summary: A concise overview of the business, highlighting the company's mission, target market, and unique value proposition.
Company Description: Detailed information about the event management company, including its legal structure, management team, and key personnel.
Market Analysis: Research and analysis of the event management industry, identifying target markets, competitors, and trends.
Services and Offerings: Description of the event management services provided, such as planning, coordination, logistics, and marketing.
Marketing and Sales Strategies: Plans for attracting clients, marketing channels, pricing strategies, and sales projections.
Operations and Management: Outline of the company's organizational structure, staffing requirements, and operational processes.
Financial Projections: Financial forecasts, including revenue projections, expense budgets, and cash flow statements.
c) Business plans can fail for various reasons, including:
Lack of Market Demand: If there is insufficient demand for the product or service, the business may struggle to generate sales and sustain profitability.
Inadequate Planning: Poorly researched or incomplete business plans may overlook critical factors, leading to unrealistic assumptions and ineffective strategies.
Weak Financial Management: Inaccurate financial projections, inadequate budgeting, or failure to secure sufficient funding can lead to financial instability.
Ineffective Marketing and Sales: Inadequate marketing strategies, poor target audience identification, or ineffective sales techniques can result in low customer acquisition and retention.
Strong Competition: Fierce competition within the industry can make it challenging for a business to gain market share and differentiate itself.
Lack of Execution: Even with a solid business plan, failure to effectively execute strategies and adapt to changing market conditions can lead to failure.
In conclusion, a business plan is crucial for outlining the direction and viability of a business. Selling the business concept is essential for attracting stakeholders, and a well-crafted business plan is a valuable tool for accomplishing this. However, the ultimate success of a business plan depends on factors such as market demand, effective planning, financial management, marketing and sales efforts, competition, and execution.
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Problem 7-18 Activity-Based Costing and Bidding on Jobs [LO7-2, LO7-3, LO7-4]
Mercer Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. There has been a long-simmering dispute between the company’s estimator and the work supervisors. The on-site supervisors claim that the estimators do not adequately distinguish between routine work such as removal of asbestos insulation around heating pipes in older homes and nonroutine work such as removing asbestos-contaminated ceiling plaster in industrial buildings. The on-site supervisors believe that nonroutine work is far more expensive than routine work and should bear higher customer charges. The estimator sums up his position in this way: "My job is to measure the area to be cleared of asbestos. As directed by top management, I simply multiply the square footage by $2.80 to determine the bid price. Since our average cost is only $2.30 per square foot, that leaves enough cushion to take care of the additional costs of nonroutine work that shows up. Besides, it is difficult to know what is routine or not routine until you actually start tearing things apart."
To shed light on this controversy, the company initiated an activity-based costing study of all of its costs. Data from the activity-based costing system follow:
Activity Cost Pool Activity Measure Total Activity
Removing asbestos Thousands of square feet 800 thousand square feet
Estimating and job setup Number of jobs 400 jobs
Working on nonroutine jobs Number of nonroutine jobs 100 nonroutine jobs
Other (costs of idle capacity and
organization-sustaining costs) None Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating and setup.
Costs for the Year Wages and salaries $ 332,000
Disposal fees 740,000
Equipment depreciation 90,000
On-site supplies 54,000
Office expenses 240,000
Licensing and insurance 440,000
Total cost $ 1,896,000
Distribution of Resource Consumption Across Activities
Removing Asbestos Estimating and Job Setup Working on Nonroutine Jobs Other Total
Wages and salaries 50 % 10 % 30 % 10 % 100 %
Disposal fees 70 % 0 % 30 % 0 % 100 %
Equipment depreciation 40 % 5 % 20 % 35 % 100 %
On-site supplies 60 % 25 % 15 % 0 % 100 %
Office expenses 10 % 40 % 15 % 35 % 100 %
Licensing and insurance 25 % 0 % 60 % 15 % 100 %
Required:
1. Perform the first-stage allocation of costs to the activity cost pools.
2. Compute the activity rates for the activity cost pools.
3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of the following jobs according to the activity-based costing system. (Round the Average cost to 2 decimal places.)
a. A routine 1,000-square-foot asbestos removal job.
b. A routine 2,000-square-foot asbestos removal job.
c. A nonroutine 2,000-square-foot asbestos removal job.
A cost allocation technique known as activity-based costing provides more precise cost information by allocating costs to specific activities based on the resources they use.
How to determine activity rates of the activity cost pools
1. First-stage portion of expenses for action cost pools:
Action Cost Pool Complete Expense Cost Portion (%)
Eliminating Asbestos $896,000 47.23% (800,000/1,696,000)
Assessing and Occupation Arrangement $376,000 19.98% (400/2,000 * 1,896,000)
Chipping away at Nonroutine Occupations $240,000 12.65% (100/400 * 1,896,000)
Other $384,000 20.14% (1 - (47.23% + 19.98% + 12.65%))
2. Activity rates for the action cost pools:
Activity Cost Pool Total Activity Activity Rate
Removing Asbestos 800,000 square feet $1.12 per square foot ($896,000 x 800,000)
Estimating and Job Setup 400 jobs $940 per job ($376,000 x 400) Working on Nonroutine Jobs 100 nonroutine jobs $2,400 per nonroutine job ($240,000 x 100)
Other N/A N/A
3. How to calculate the cost using an activity-based costing system
a. A typical job to remove 1,000 square feet of asbestos:
A typical asbestos removal job for 2,000 square feet: Total Cost = (Area in thousands of square feet) * Activity Rate Total Cost = 1 * $1.12 = $1.12
Average Cost per Thousand Square Feet = Total Cost / Area in thousands of square feet Average Cost = $1.12 / 1 = $1.12 b.
Complete Expense = 2 * $1.12 = $2.24
Normal Expense = $2.24/2 = $1.12
c. A nonroutine 2,000-square-foot asbestos expulsion work:
The normal cost is $4.80 separated by two, which breaks even with $2.40. Note: The costs are adjusted to the closest two decimal places.
By allocating costs according to the utilization of resources by various activities, the activity-based costing system provides cost information that is more accurate.
It makes it possible to have a better understanding of the costs of both routine and nonroutine jobs, which in turn makes it possible to make pricing decisions that are more based on facts and resolves the disagreement that exists between the estimator and the work supervisors.
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Income statement 2021
Sales 1800
Cost goods sold 1000
Overhead costs 510
Operating profit (EBIT) 290
Net interest expense 10
Earnings before tax 280
Taxes 70
Net income 210
Balance Sheet 2021
Cash 200
other operating current assets 800
Net Plant & Equipment 800
Total Assets 1800
Accounts Payable 120
Wages Payable 120
Long term Debt 160
Total Liabilities 400
All common equity 1400
From Cash flow statment: Depreciation and Amortization = $60
The market value of equity (price x shares outstanding) = $3400
Assuming the market value of each liability equals its book value, what is the Enterprise Value / EBITDA ratio?
The Enterprise Value / EBITDA ratio can be calculated using the following formula:
Enterprise Value / EBITDA = (Market Value of Equity + Total Debt - Cash) / EBITDA
Given the information provided:
Market Value of Equity = $3400
Total Debt (Long-term Debt) = $160
Cash = $200
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) = EBIT + Depreciation and Amortization = $290 + $60 = $350
Substituting the values into the formula:
Enterprise Value / EBITDA = ($3400 + $160 - $200) / $350 = $3360 / $350 ≈ 9.6
Therefore, the Enterprise Value / EBITDA ratio is approximately 9.6.
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AP-9A LO 6 Ariel Johns provides the following budgets for cash receipts and cash disbursements for 2021 on a quarterly basis. The ending cash balance on December 31, 2020, was $18,500. Q1 Q2 Q3 Q4 Year Receipts $39,000 $28,000 $12,000 $48,000 $127,000 Disbursements 20,000 33,000 18,000 33,000 104,000 Required a) Calculate the net cash flow for each quarter. Q1 Q2 Q3 Q4 Net Cash Flow b) Calculate the ending cash balance for each quarter. Q1 Q2 Q3 Q4 Opening Balance Net Cash Flow Ending Balance
Optimal solution is to produce 90 small TV sets and 30 medium TV sets per week, which will maximize the weekly profit to ₱ 840,000.
a) Formulate the linear programming model for Somesong to maximize its weekly profit.
Let X1 and X2 be the number of small and medium TV sets produced per week, respectively. The objective is to maximize the weekly profit, which is given by:
Maximize Z = 6000X1 + 10000X2
Subject to the following constraints:
Division 1 capacity: 2X1 + X2 ≤ 180
Division 2 capacity: X1 + 3X2 ≤ 180
Division 3 capacity: X1 + 2X2 ≤ 140
Non-negativity constraint: X1 ≥ 0, X2 ≥ 0
The first three constraints represent the capacity limitations of the three divisions. The non-negativity constraint ensures that we cannot produce a negative number of TVs.
b) Solve the problem graphically to find the optimal solution.
To solve the problem graphically, we can plot the constraints on a graph and find the feasible region. Then, we can evaluate the objective function at each corner point of the feasible region to find the optimal solution.
The constraints can be rewritten in terms of X2 (since it has a coefficient of 1 in all three constraints), as follows:
Division 1 capacity: X2 ≤ -2X1 + 180
Division 2 capacity: X2 ≤ -X1 + 60
Division 3 capacity: X2 ≤ -X1/2 + 70
We can then plot these constraints on a graph with X1 on the x-axis and X2 on the y-axis:
linear programming graph
The feasible region is the shaded area in the graph above. The vertices of the feasible region are (0,0), (60,20), (70,25), (90,30), and (90,0).
We can then evaluate the objective function Z = 6000X1 + 10000X2 at each vertex:
Z(0,0) = 0
Z(60,20) = 6000(60) + 10000(20) = 480000
Z(70,25) = 6000(70) + 10000(25) = 550000
Z(90,30) = 6000(90) + 10000(30) = 840000
Z(90,0) = 6000(90) + 10000(0) = 540000
The optimal solution is to produce 90 small TV sets and 30 medium TV sets per week, which will maximize the weekly profit to ₱ 840,000.
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Kwik Repair Service, Inc. is trying to establish the standard labor cost of a typical engine tune-up. The following data have been collected from time and motion studies conducted over the past month.
Actual time spent on the tune-up 1.0 hour ;
Hourly wage rate $12 ;
Payroll taxes 10% of wage rate ;
Setup and downtime 10% of actual labor time ;
Cleanup and rest periods 20% of actual labor time ;
Fringe benefits 25% of wage rate ;
Instructions
(a) Determine the standard direct labor hours per tune-up
(b) Determine the standard direct labor hourly rate.
(c) Determine the standard direct labor cost per tune-up.
(d) If a tune-up took 1.5 hours at the standard hourly rate, what was the direct labor quantity variance?
Therefore, the direct labor quantity variance was $3.24.
(a) The standard direct labor hours per tune-up are determined as follows:
Calculating the Standard Direct Labor Hours per Tune-Up
Actual time spent on the tune-up 1.0 hour
Setup and downtime (10% of 1.0 hour) 0.1 hour
Cleanup and rest periods (20% of 1.0 hour) 0.2 hour
Total direct labor hours 1.3 hours
(b) The standard direct labor hourly rate is determined as follows:
Calculating the Standard Direct Labor Hourly Rate
Hourly wage rate $12.00
Payroll taxes (10% of $12.00) 1.20
Fringe benefits (25% of $12.00) 3.00
Standard direct labor hourly rate $16.20
(c) The standard direct labor cost per tune-up is determined as follows:
Calculating the Standard Direct Labor Cost per Tune-Up
Standard direct labor hourly rate $16.20
Standard direct labor hours per tune-up 1.3 hours
Standard direct labor cost per tune-up $21.06
(d) The direct labor quantity variance is determined as follows:
Calculating the Direct Labor Quantity Variance
Actual direct labor hours 1.5 hours
Standard direct labor hours per tune-up 1.3 hours
Direct labor quantity variance (0.2 hours x $16.20) $3.24
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When the capacity exceeds the actual demand, what is the proper way to manage the demand?
Decrease the price of the product
Open new plants
Increase the price of the product
none of the above
When the capacity exceeds the actual demand, the proper way to manage the demand is to decrease the price of the product. A company should decrease the price of the product if the capacity exceeds the actual demand.
What is demand?Demand refers to the quantity of goods and services that customers are willing and able to buy at a given price, over a given period of time.
What is supply?Supply refers to the quantity of goods and services that manufacturers are willing and able to sell at a given price, over a given period of time.
What is Capacity?Capacity refers to the amount of goods and services that a firm is capable of producing during a given period of time with the available resources.
To sum up, when a firm has a capacity that exceeds the actual demand, it means the firm is producing more than it can sell, resulting in excess inventory. To manage the demand, the firm may need to decrease the price of the product to boost demand and increase sales.
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In Chapter 1, we studied the Return on Assets ratio. Explain how to calculate the ratio, what it measures, and what it tells an analyst about the company. Finally, select a company's recent financial statements, calculate the ratio for your selected company, and explain what this ratio tells you about the company's financial health or performance. In this context, a recent set of financial statements would be those issued in the current or previous year.
For an explanation and examples of calculating the Return on Assets ratio, refer to the Module 1 Video Lectures Connect. (See COV LO 01-A2 Parts 2 and 3).
Your paper should be at least one page in length and conform to CSU Global Guide to Writing and APA (Links to an external site.). Include at least two scholarly references in addition to the course textbook. Also, include a title and reference page. The CSU Global Library (Links to an external site.) is a good place to find these references.
Part A of the Critical Thinking Assignment will open at the start of the week in which it is scheduled. Both Parts A and B of the Critical Thinking Assignment are due by 11:59 p.m. MT on Sunday of the assigned week.
Submit your written assignment to the Module 1 Critical Thinking Assignment in Canvas.
Review the grading rubric to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.
The Return on Assets ratio measures the return on investment of a company's assets. It is calculated by dividing the net income of a company by its total assets.
This ratio can help analysts to determine the efficiency of the company in generating profits from its assets. The higher the Return on Assets ratio, the more efficient a company is in using its assets to generate profits.To calculate the Return on Assets ratio, we need to follow the below formula:
Return on Assets Ratio = Net Income / Total Assets
The Return on Assets ratio is a crucial metric in determining the profitability and financial health of a company. A high Return on Assets ratio indicates that a company is making effective use of its assets and is generating a good return for its investors.
Conversely, a low Return on Assets ratio indicates that a company may not be using its assets efficiently, and its profitability may be affected.The Return on Assets ratio can be analyzed with other financial ratios to provide a more comprehensive picture of a company's financial health.
By comparing the Return on Assets ratio of a company with those of its competitors, investors can determine whether a company is under performing or outperforming its competitors.In conclusion, the Return on Assets ratio is an essential metric for analyzing a company's financial performance and can provide useful insights into its profitability and financial health.
For instance, Walmart is a multinational retail corporation that has been analyzed to have a Return on Assets ratio of 5.64% for the year 2019. This implies that Walmart is generating a return of 5.64 cents for every dollar of assets it has. This can be a good indication of the effectiveness of the company's management and its ability to use its assets effectively to generate profits.
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Business law
Sol y Mar Limited is an incorporated company, which owns several ocean view properties throughout the Caribbean and is in the business of property rental to tourists. When Sol y Mar was incorporated in 2017 its articles provided that the company would only engage in the purchase and rental of ocean view properties. In early 2022, it was announced by the Board of Directors of Sol y Mar that the business was expanding its business to include the production of wigs by collecting dog fur. Sasha Singh a minority shareholder in Sol y Mar rejected the decision to have the articles of the company amended to reflect the expansion. Sasha intends to take legal action as a shareholder. Advise Sasha.
Sasha should consult a legal professional to assess the viability of taking legal action against the Board's decision to expand the company's business activities, considering the articles of incorporation and applicable laws and regulations.
In this scenario, Sasha Singh, a minority shareholder in Sol y Mar Limited, is faced with a decision by the company's Board of Directors to expand the business to include the production of wigs from dog fur. Sasha opposes this decision and intends to take legal action as a shareholder.
The key consideration in advising Sasha is the company's articles of incorporation, which originally limited the business activities of Sol y Mar to the purchase and rental of ocean view properties. These articles serve as a binding contract between the company and its shareholders, including Sasha. Any amendment to the articles generally requires shareholder approval.
Sasha may have grounds to challenge the Board's decision if it violates the existing articles of incorporation or if it is not in the best interests of the company and its shareholders. However, the success of legal action will depend on the specific laws and regulations governing corporate governance and shareholder rights in the jurisdiction where Sol y Mar is incorporated.
To determine the best course of action, Sasha should seek the guidance of a legal professional who can assess the specific circumstances, review the articles of incorporation, and advise on the available legal remedies. They will be able to provide personalized advice and help Sasha understand their rights and options as a minority shareholder.
Therefore, Sasha should consult a legal professional to assess the viability of taking legal action against the Board's decision to expand the company's business activities. The outcome will depend on the interpretation of the articles of incorporation and the applicable laws and regulations governing corporate governance and shareholder rights.
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Read the" Herbalife Nutrition Achieve Success by Managing Risks" Case Study and Answer all questions based on the case study facts. Support and justify your answers by applying concepts or theories learned. Herbalife Nutrition
Herbalife Nutrition, Ltd. is the second-largest multilevel marketing company in the world. The story of Herbalife includes direct selling, but the company’ success has come through the acceptance of its product by consumers, much like any other company. One difference between Herbalife and most companies is that their products are not sold in retail stores; rather, consumers interact with independent sellers to order products. Herbalife is a publicly traded company headquartered in Los Angeles, California, that has loyal customers around the world. Herbalife focuses on the sale of products related to nutrition, weight management, and personal care, with independent contractors selling in more than 90 countries. Mark Hughes founded the company in 1980 out of a desire to create a safe alternative to other weight loss products. Herbalife’s first sales were conducted from the trunk of Hughes’s car in Los Angeles. Two years later, the company reached $2 million in sales. Herbalife became a publicly traded company in 1986 when it joined the NASDAQ stock exchange. Since then, Herbalife has become a sustainable multi-billion-dollar global company. Throughout its growth, Herbalife has experienced many changes to leadership and ownership structure. Foundational Products Herbalife sells products for weight management, nutrition, energy, fitness, and personal care that support a healthy lifestyle. The weight management line consists of Formula 1 protein shakes, supplements, weight loss enhancers, protein bars, and snacks, all serving the purpose of helping
customers to attain their weight goals. For instance, the Personalized Protein Powder and the Protein Drink Mix offerings provide an alternative to traditional meals while supplying energy and curbing hunger cravings, whether consumers want to lose or maintain their weight or build muscle mass. Targeted nutrition products include dietary and nutritional supplements that contain herbs, vitamins, minerals, and other natural ingredients to strengthen specific areas of the body that tend to be problematic for many people. For example, Tri-Shield helps the heart stay healthy by maintaining good cholesterol levels and providing antioxidants, and Ocular Defense Formula and Joint Support Advanced offer nutritional aid for the eyes and joints of aging adults. The energy and fitness product options are designed for those engaged in sports and fitness activities. Customers can choose from drink mix-ins such as the H3 O Fitness Drink, which enhances clarity and rehydrates the body, or utilize supplements such as N-R-G (Nature’s Raw Guarana Tablets), which also promote mental clarity. Herbalife’s personal care products include skin cleansers, moisturizers, lotions, shampoos, and conditioners. In this product line, Herbalife offers program sets called Herbalife SKIN, containing groups of cleansers, moisturizers, and creams customized for different types of skin, from dry to oily. Overall, Herbalife follows a strategy of producing high-quality products that enhance customer health and well-being
Identify Herbalife strategies that make up the market/ product matrix used international marketing.
Herbalife Nutrition, a global multilevel marketing company, focuses on direct selling of nutrition, weight management, and personal care products. It employs strategies such as direct selling, product diversification, and a focus on health and well-being to succeed in international markets.
Based on the information provided in the case study, it is not explicitly mentioned that Herbalife utilizes a market/product matrix in its international marketing strategy. The case study focuses more on the company's product offerings and its success through direct selling and customer acceptance. However, Herbalife does employ certain strategies that contribute to its international marketing efforts. These strategies include:
1. Direct Selling Model: Herbalife's approach of selling products through independent sellers in more than 90 countries is a key strategy in its international marketing. This direct selling model allows the company to establish a strong presence in different markets and tailor its marketing efforts to specific regions.
2. Product Diversification: Herbalife offers a wide range of products related to nutrition, weight management, and personal care. This product diversification strategy enables the company to cater to different customer needs and preferences in various international markets. By offering targeted nutrition products, energy and fitness products, and personal care items, Herbalife ensures that it can reach a broader customer base.
3. Focus on Health and Well-being: Herbalife emphasizes the production of high-quality products that enhance customer health and well-being. This strategy aligns with the growing global trend towards health consciousness and the increasing demand for nutritional and wellness products. By positioning itself as a provider of products that support a healthy lifestyle, Herbalife appeals to consumers who prioritize their well-being.
While the market/product matrix is not specifically mentioned, these strategies contribute to Herbalife's international marketing efforts and enable the company to effectively reach and serve customers in various countries.
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Income Statements under Absorption Costing and Variable Costing
Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July:
Sales (16,500 units)
$2,145,000
Production costs (21,000 units):
Direct materials
$1,010,100
Direct labor
485,100
Variable factory overhead
241,500
Fixed factory overhead
161,700
1,898,400
Selling and administrative expenses:
Variable selling and administrative expenses
$294,300
Fixed selling and administrative expenses
113,900
408,200
If required, round interim per-unit calculations to the nearest cent.
a. Prepare an income statement according to the absorption costing concept.
Gallatin County Motors Inc.
Absorption Costing Income
Statement
For the Month Ended July 31
Here is the income statement for Gallatin County Motors Inc. under absorption costing:
The Income StatementGallatin County Motors Inc.
Absorption Costing Income
Statement
For the Month Ended July 31
Sales $2,145,000
Cost of goods sold:
Direct materials $1,010,100
Direct labor 485,100
Variable factory overhead 241,500
Fixed factory overhead 161,700 2,898,400
Gross profit 246,600
Selling and administrative expenses:
Variable selling and administrative expenses $294,300
Fixed selling and administrative expenses 113,900 408,200
Net income $38,400
The absorption costing income statement includes all manufacturing costs, both fixed and variable, in the cost of goods sold.
This means that the cost of goods sold is higher under absorption costing than it would be under variable costing, which only includes variable manufacturing costs in the cost of goods sold.
The higher cost of goods sold under absorption costing will result in a lower gross profit and net income.
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provide an overview of the response problem(s) that Hurricane Irma posed to the emergency resources assembled to respond to the disaster. List the top three objectives that you feel should have been included in the first operational period planning. Limit the response to the landfall of Irma. Using the information obtained from the independent study courses in the previous modules what types of assistance would you be requesting and from what agencies would you expect these resources to be supplied.
Hurricane Irma posed challenges in communication, shelter, and infrastructure for emergency response teams. The top objectives should have focused on search and rescue, providing essential supplies, and restoring infrastructure. Assistance requested during the landfall of Irma included medical support, food/water supply, power restoration, transportation, emergency management, and human resources aid.
The Hurricane Irma posed numerous response problems to the emergency resources assembled to respond to the disaster. The response problem that Hurricane Irma posed to the emergency resources assembled to respond to the disaster are listed below:
1. Communications- Due to power outages and damaged infrastructure, communications became a challenge, and it was difficult to relay vital information to other agencies, including police and other rescue teams.
2. Shelter and Evacuation- Hurricane Irma affected the coastal areas of Florida. The local residents needed to evacuate from the affected areas to safe places, but there was a shortage of shelters.
3. Infrastructure- Hurricane Irma caused extensive damage to roads, power lines, and other essential facilities. The damaged infrastructure made it challenging for rescue teams to access affected areas.
The top three objectives that should have been included in the first operational period planning are:
1. Search and Rescue operations for the affected areas.
2. Providing essential supplies such as food, water, medicine, and other essential items to the affected population.
3. Restoration of essential infrastructure such as power lines, roads, and other essential facilities.
Types of assistance that can be requested during the landfall of Irma are:
1. Medical assistance to provide medical support to affected persons, including injured people.
2. Food and water supply to provide necessary food items and drinking water to the affected population.
3. Power restoration assistance to restore power supply to the affected areas, which can help people to use electronic devices for communication and other purposes.
4. Transportation assistance to access affected areas.
5. Emergency management assistance from government and non-government organizations.
6. Human resources assistance from non-governmental organizations to assist in providing food, water, and shelter to the affected population.
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Chapter 6:
Understand types of diversification and why you would use them
Understand vertical integration and its pros and cons
Understand the strategic management process
Understand the differences between intended-realized-emergent strategies
Understand internationalization
Chapter 6 covers various topics including types of diversification, vertical integration, strategic management process, intended-realized-emergent strategies, and internationalization in business.
Chapter 6 covers various topics related to business strategy and diversification. Here is a clear and concise summary of the key points:
1. Types of diversification: Diversification refers to the expansion of a company's operations into new products, markets, or industries. There are three main types of diversification: concentric, horizontal, and conglomerate.
- Concentric diversification involves entering new markets or developing new products that are related to the company's existing business. For example, a fast-food chain adding new menu items.
- Horizontal diversification involves entering new markets or developing new products that are unrelated to the company's existing business. For example, a clothing retailer acquiring a chain of electronics stores.
- Conglomerate diversification involves entering new markets or developing new products that are completely unrelated to the company's existing business. For example, a food and beverage company acquiring a telecommunications company.
2. Vertical integration: Vertical integration refers to the extent to which a company controls its supply chain. It can be either backward integration (acquiring suppliers) or forward integration (acquiring distributors or retailers).
- Pros of vertical integration include increased control over quality, reduced dependency on suppliers or distributors, and potential cost savings.
- Cons of vertical integration include increased risk, higher capital requirements, and potential loss of focus on core competencies.
3. Strategic management process: This refers to the set of activities undertaken by an organization to formulate and implement its strategies. It involves five key steps:
- Environmental analysis: Assessing the internal and external factors that can impact the organization's performance.
- Strategy formulation: Developing a clear and achievable strategy based on the organization's goals and environmental analysis.
- Strategy implementation: Executing the chosen strategy by allocating resources, designing organizational structures, and setting up control systems.
- Evaluation and control: Monitoring the progress and effectiveness of the strategy, making adjustments as needed.
- Strategic control: Ensuring that the organization's strategies align with its mission and goals.
4. Intended-realized-emergent strategies: These terms refer to the different outcomes that can occur during the strategy implementation process.
- Intended strategy: The strategy that an organization plans to implement.
- Realized strategy: The strategy that is actually implemented.
- Emergent strategy: Unplanned or unexpected strategies that emerge during the implementation process.
5. Internationalization: This refers to the process of expanding a company's operations into international markets. It involves various strategies such as exporting, licensing, joint ventures, and foreign direct investment.
These concepts are essential for understanding business strategy and diversification. By mastering these topics, you will gain insights into the different approaches companies use to grow and compete in the global marketplace.
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CASE STUDY [30 Marks] Ramona Smith, is not authorised by Fawaz Blane to act as an agent. Ramona is aware that Fawaz is trying to purchase a piece of property of the coast of Cape Town to undertake property development. Ramona becomes aware of a profitable investment opportunity involving elite property on the coast of Cape Town. Unfortunately, Ramona must ask quickly and is not given the opportunity to confirm her intentions prior to acting. Ramona informs the seller that she is Fawaz's agent and quickly secures the sale of that prime property. Thereafter Ramona informs Fawaz that she acted as his agent and he must ratify the act. Fawaz is overjoyed and excited to do so, he acquires the property and gives Ramona a gift of R50000.00 as a token for his appreciation. In light of the above answer the following questions Answer ALL the questions in this section. Question 1 Using examples, identify and explain the requirements that must be adhered to when a principal ratifies an act conducted by an agent. Question 2 Discuss the circumstances under which termination of agency will occur.
A. When a principal ratifies an act conducted by an agent, certain requirements must be adhered to for the ratification to be valid. B. The termination of agency can occur under various circumstances, including Fulfillment of the purpose ,Expiration of the term , Mutual agreement, Revocation by the principal .
Lets see each part in more details The principal must have full knowledge of the act that was performed by the agent on their behalf. They should be aware of the nature, terms, and consequences of the act. In the given case study, Fawaz must have knowledge of the sale of the property and the role Ramona played as his agent. Also, The principal must express their intention to ratify the act. They should clearly communicate their agreement and acceptance of the act performed by the agent. In the case study, Fawaz informs Ramona that he acted as his agent and asks him to ratify the act. most importantly he principal must have the legal capacity to ratify the act. They should be of sound mind and have the legal authority to confirm or validate the act. In the case study, Fawaz has the capacity to ratify the act as he is the owner of the property.
In general , Fulfillment of the purpose involves The agency relationship terminates when the purpose for which the agency was created has been fulfilled. For example, if an agent was appointed to sell a specific property, once the property is sold, the agency terminates. Expiration of the term is An agency can be terminated when the agreed-upon term or period for which the agency was established expires. The agency relationship ends automatically at the end of the specified term. Mutual agreement The principal and the agent can mutually agree to terminate the agency at any time. Both parties must consent to the termination, and it is recommended to have the agreement in writing. The principal has the right to revoke the agency at any time, as long as it does not violate any contractual obligations. The revocation must be communicated to the agent, and it takes effect upon receipt of the notice.
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Letang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $275,000, has a four-year life, and requires $81,000 in pretax annual operating costs. System B costs $355,000, has a six-year life, and requires $75,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Whichever project is chosen, it will not be replaced when it wears out. The tax rate is 22 percent and the discount rate is 9 percent. Calculate the NPV for both conveyor belt systems. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Which conveyor belt system should the firm choose? System B System A
The net present value (NPV) of the investment in the conveyor belt systems is calculated to determine whether or not it is financially feasible. The NPV is the sum of the present values of all expected cash flows (both inflows and outflows) discounted at the firm's cost of capital.
The first cash flow for each system is the initial investment in the project. The subsequent cash flows are the annual operating cash flows for each year and the terminal cash flows at the end of the project life. The operating cash flows are before tax and are used to calculate the depreciation tax shield, which is the tax savings resulting from the depreciation expense. The terminal cash flows are the after-tax cash flows from the sale of the assets at the end of the project life.
Since both systems have no salvage value, the terminal cash flows are equal to the tax paid on the sale of the assets. The tax paid is the difference between the sale price and the book value of the assets (i.e., the accumulated depreciation).The following table shows the calculations of the NPV of each project:System A System B Initial investment $(275,000) $(355,000)Operating cash flows (annuity) $93,000 $110,000 Terminal cash flow 0 $(12,396)Tax on terminal cash flow 0 $2,727
Depreciation tax shield $16,005 $16,605 Discount rate 9% 9%Present value of operating cash flows $304,647 $447,969 Present value of terminal cash flow 0 $(9,153)Present value of tax on terminal cash flow 0 $2,099 Present value of depreciation tax shield $40,538 $42,016 NPV $70,185 $128,931 The NPV for System A is $70,185 and for System B is $128,931. Therefore, the company should choose System B since it has a higher NPV than System A.
Thus, the company should choose System B as it has a higher NPV than System A.
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Suppose a firm has 35.60 million shares of common stock outstanding at a price of $27.64 per share. The firm also has 446000.00 bonds outstanding with a current price of $1,199.00. The outstanding bonds have yield to maturity 7.22%. The firm's common stock beta is 1.28 and the corporate tax rate is 37.00%. The expected market return is 11.56% and the T-bill rate is 3.25%. Compute the following: -Weight of Equity of the firm -Weight of Debt of the firm -Cost of Equity of the firm -After Tax Cost of Debt of the firm -WACC for the Firm
Weight of Equity of the firm: 52.20%, Weight of Debt of the firm: 47.80%, Cost of Equity of the firm: 15.47%, After Tax Cost of Debt of the firm: 4.54%, WACC for the Firm: 9.90%
To calculate the weights of equity and debt, we need to determine the market values of equity and debt. The market value of equity is calculated by multiplying the number of shares by the stock price: 35.60 million shares * $27.64 = $984.704 million. The market value of debt is the number of bonds outstanding multiplied by the bond price: 446,000 bonds * $1,199 = $534.754 million.
The weight of equity is the market value of equity divided by the sum of the market value of equity and debt: $984.704 million / ($984.704 million + $534.754 million) = 0.5220 or 52.20%.
The weight of debt is the market value of debt divided by the sum of the market value of equity and debt: $534.754 million / ($984.704 million + $534.754 million) = 0.4780 or 47.80%.
To calculate the cost of equity, we use the capital asset pricing model (CAPM) formula: Cost of Equity = Risk-Free Rate + Beta * Equity Risk Premium.
The risk-free rate is given as 3.25% and the equity risk premium is the difference between the expected market return (11.56%) and the risk-free rate: 11.56% - 3.25% = 8.31%. Therefore, the cost of equity is 3.25% + (1.28 * 8.31%) = 15.47%.
The after-tax cost of debt is the yield to maturity (YTM) of the bonds multiplied by (1 - Tax Rate): 7.22% * (1 - 0.37) = 4.54%.
The weighted average cost of capital (WACC) is calculated using the weights of equity and debt, and their respective costs:
(Weight of Equity * Cost of Equity) + (Weight of Debt * After-Tax Cost of Debt). Plugging in the values, the WACC for the firm is (0.5220 * 15.47%) + (0.4780 * 4.54%) = 9.90%.
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Assume the market demand is Q = 1000 - 4P. If the average cost function
in the long run (LRAC) for all firms is LRAC = 50 - 5Q + Q2
Identify the number of firms still operating in the industry when re
To determine the number of firms still operating in the industry, we need to find the long-run equilibrium where the market demand equals the long-run average cost (LRAC) for each firm.
Given the market demand function Q = 1000 - 4P, we can substitute it into the LRAC function: LRAC = 50 - 5Q + Q^2. Replacing Q with 1000 - 4P: LRAC = 50 - 5(1000 - 4P) + (1000 - 4P)^2. Simplifying the equation: LRAC = 50 - 5000 + 20P - 1000 + 8P - 16P^2. Combining like terms: LRAC = -5166 + 28P - 16P^2 . In the long-run equilibrium, firms will produce at the minimum LRAC, so we need to find the minimum point of the LRAC curve by taking the derivative and setting it equal to zero: dLRAC/dP = 28 - 32P = 0. Solving for P: 32P = 28 = 28/32 = 7/8.
Substituting P back into the LRAC equation: LRAC = -5166 + 28(7/8) - 16(7/8)^2. Calculating the LRAC: LRAC ≈ -5166 + 19.25 - 8.56 ≈ -5155.31. Since the LRAC is negative, it does not represent a feasible cost function. Therefore, there is no equilibrium in this scenario, and we cannot determine the number of firms still operating in the industry based on the given information.
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You want to be a millionaire in 30 years. You open an investment account that promises to pay 5.9% per year. How much money must you deposit each year, so that you reach your goal on time? Round to the nearest digit. $12,873.26 $2,633.54 $18,484.95 $71,873.26
To reach your goal of becoming a millionaire in 30 years with an investment account that offers a 5.9% annual interest rate, you need to deposit approximately $2,633.54 each year.
In order to calculate the annual deposit needed, we can use the formula for the future value of an ordinary annuity:
FV = P * [(1 + r)^n - 1] / r
Where:
FV = Future value (desired amount, $1,000,000 in this case)
P = Annual deposit
r = Annual interest rate (5.9% expressed as 0.059)
n = Number of years (30)
Rearranging the formula, we have:
P = FV * (r / [(1 + r)^n - 1])
Plugging in the given values, we get:
P = $1,000,000 * (0.059 / [(1 + 0.059)^30 - 1])
P ≈ $2,633.54
Therefore, to reach your goal of becoming a millionaire in 30 years, you need to deposit approximately $2,633.54 each year into your investment account.
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how Business Communications class can develop your skill and what kind of skill you can develop ?
Business Communications class can develop various skills in students. It is a course that helps students learn effective communication skills in the business world. Students will learn the importance of effective communication, both verbal and written, in the corporate world. They will learn how to communicate their ideas and messages in a clear and concise manner.
Effective communication is critical in any business. Business Communications class teaches students how to communicate effectively with their coworkers, clients, and other stakeholders. It also helps students develop their interpersonal communication skills. With this class, students learn how to communicate professionally, persuasively, and with confidence. These skills can help them in the following ways:
Build trust and relationships with clients and coworkers.
Establish a good impression with new people.
Respond to conflict and criticism effectively.
Make effective presentations and speeches.
Write effective emails and other business documents.
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