The main answer to the statement "Expansionary monetary policy is effective at changing Y in both the classical and simple Keynesian models" is that it is disagreed upon.
Disagreement with the statement
There is a difference in the models of classical and simple Keynesian regarding the effectiveness of expansionary monetary policy in changing Y. Thus, the statement that the policy is effective in both models is not true.
In classical economics, the expansionary monetary policy is ineffective in changing Y. The classical theory assumes that there is a full employment level (natural level) of output in the economy. Any policy that deviates from this level will have no impact on output, as it will only lead to an increase in prices or inflation.
In contrast, the simple Keynesian model assumes that there are idle resources in the economy. Therefore, expansionary monetary policy can stimulate aggregate demand and output. However, the effectiveness of the policy depends on the degree of excess capacity in the economy. If there is a lot of idle resources in the economy, the policy will be more effective in changing Y, but if there is little to no excess capacity, then the policy will have little or no impact on output.
Diagrammatic representation
The classical model represents the economy at full employment level. The aggregate supply curve is vertical, as the output is fixed at this level. Any increase in aggregate demand will only result in an increase in prices, represented by the upward movement along the supply curve.
In contrast, the simple Keynesian model represents the economy with excess capacity. The aggregate supply curve is horizontal up to the full employment level, after which it becomes vertical. The horizontal section represents the idle resources in the economy. Therefore, an increase in aggregate demand will lead to an increase in output, represented by the shift of the demand curve to the right and movement along the supply curve. However, once the full employment level is reached, a further increase in aggregate demand will result in an increase in prices, represented by the upward movement along the vertical section of the supply curve.
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1. Draw the profit-of-the-call line for a call with exercise price $50 and premium $3.
2. For a put option of CN¥ with $0.14 exercise price and $0.0005 premium,
a) Plot and label the benefit-from-exercise line.
b) Plot and label the profit-from-exercise line.
c) Mark a thick line for profit-of-the-put and label it.
Profit-of-the-Call Line: The profit-of-the-call line represents the profit or loss that an investor would make from holding a call option at expiration, based on the underlying asset's price.
For a call option with an exercise price of $50 and a premium of $3, the profit-of-the-call line can be described as follows:
If the underlying asset's price at expiration is below the exercise price of $50, the call option will not be exercised, resulting in a loss equal to the premium paid.
If the underlying asset's price at expiration is above the exercise price plus the premium (in this case, $53), the call option will be profitable, with the profit increasing as the asset's price rises above the exercise price plus the premium.
The profit-of-the-call line will have a negative slope below the breakeven point ($53 in this case) and a positive slope above the breakeven point. It will intersect the y-axis at the negative value equal to the premium paid.
For the put option with a CN¥0.14 exercise price and a CN¥0.0005 premium:
a) Benefit-from-Exercise Line:
The benefit-from-exercise line represents the gain from exercising the put option. For a put option, the benefit from exercise is the difference between the exercise price and the price of the underlying asset at expiration.
In this case, if the price of the underlying asset at expiration is below CN¥0.14, the put option will be in-the-money and exercising it will result in a benefit equal to the exercise price minus the asset price. The benefit-from-exercise line would be a horizontal line at the value of CN¥0.14 (exercise price) for all asset prices below CN¥0.14.
b) Profit-from-Exercise Line:
The profit-from-exercise line represents the profit or loss from exercising the put option, taking into account the premium paid for the option. It is calculated by subtracting the premium from the benefit-from-exercise line.
c) Profit-of-the-Put Line:
The profit-of-the-put line represents the overall profit or loss from holding the put option. It takes into account both the premium paid and the profit or loss from exercising the option. The profit-of-the-put line would be the profit-from-exercise line shifted downwards by the amount of the premium.
To better visualize these lines, you may consider plotting them on a graph using appropriate scales for the x-axis (underlying asset price) and y-axis (profit/loss).
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Training in the field of Accountancy in Guyana
In 300 words write an essay on: How
will training enhance your effectiveness on the job or contribute
to national Development?
Training in the field of accountancy is a crucial aspect of enhancing one's effectiveness on the job and contributing to national development. In Guyana, accountancy is an essential profession that plays a significant role in the economic growth of the country. Therefore, investing in training is necessary to produce competent accountants who can meet the needs of the industry.
Firstly, training in accountancy equips individuals with the necessary skills and knowledge to perform their job duties effectively. Accountants who are trained are better equipped to handle complex financial tasks, such as managing budgets, preparing financial statements, and analyzing financial data. Additionally, training in accountancy provides individuals with knowledge on tax regulations, accounting standards, and audit requirements, making them more efficient in handling compliance issues.
Secondly, training enhances an individual's ability to adapt to new trends and technologies in the industry. In the accounting field, technology is constantly evolving, and it is essential for accountants to be up-to-date with the latest trends. Training programs provide individuals with opportunities to learn new software, techniques, and best practices that help them stay competitive in the job market.
Furthermore, training contributes to national development by producing a skilled workforce that can meet the needs of the industry. In Guyana, the economy is driven by various sectors, such as agriculture, mining, and manufacturing. All these sectors require the services of accountants to manage their finances. Trained accountants are, therefore, vital in ensuring that these sectors operate efficiently and contribute to the overall growth of the country.
In conclusion, training in the field of accountancy is essential for individuals who want to enhance their effectiveness on the job and contribute to national development. The knowledge and skills acquired through training make individuals better equipped to handle complex financial tasks, adapt to new trends, and meet the needs of the industry. Therefore, investing in training is necessary to produce competent accountants who can contribute to the growth of the economy.
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Dividend Yield is calculated by... Dividng Dividends by Assets O Dividing Dividends by Net Book Value Dividing Dividends by Stock Price Dividing Dividends by Net Income Dividing Dividends by EBIT
Dividend yield is calculated by dividing dividends by stock price. Dividend yield is a ratio that measures how much a company pays out in dividends each year relative to its stock price.
It is an important metric for investors as it can help them evaluate the income potential of an investment. The higher the dividend yield, the more income an investor can earn from a particular stock. Conversely, a low dividend yield may indicate that the company is not paying out a significant amount in dividends or that the stock price is overvalued. Dividend yield is calculated by dividing the annual dividends per share by the stock price per share. For example, if a company pays out $1 in dividends per share and the stock price is $20 per share, then the dividend yield would be 5%. This means that an investor who owns one share of the company would earn $1 in dividends per year, which is equivalent to a 5% return on their investment. Dividend yield is an important factor to consider when evaluating the income potential of an investment, but it is not the only factor.
Investors should also consider other factors such as the company's financial health, growth prospects, and valuation. A company with a high dividend yield may be attractive to income-seeking investors, but it may also indicate that the company is not investing in growth opportunities or that it is facing financial difficulties. As with any investment, investors should conduct their own research and analysis to determine whether a particular stock is a good fit for their portfolio.
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Dividend Yield is calculated by dividing Dividends by Stock Price.The dividend yield is a financial ratio that measures how much a company pays out in dividends each year relative to its stock price.
The dividend yield is calculated by dividing the annual dividend payment by the prevailing stock price and expressing the result as a percentage. The formula for dividend yield is as follows: Dividend Yield = Annual Dividend Payment / Stock PriceAs we can see from the formula, Dividend Yield is calculated by dividing Dividends by Stock Price, therefore option C is the correct answer.
Dividend yield is an important financial metric for investors as it provides a measure of how much money they can expect to earn from holding stock. It is also used as a way to compare the dividend-paying potential of different stocks and to evaluate the performance of dividend-focused investment strategies.
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"Human resource accounting is the process of identifying and reporting investments made in the human resources of an organization that are presently unaccounted for in the conventional accounting practices." Why is this so?
Human resource accounting is important because it helps organizations recognize their investment in human capital, which is not reflected in traditional accounting practices. Human resource accounting is a method of valuing and reporting a company's human resources.
It helps in the measurement of human resources like knowledge, skills, abilities, values, and experience in monetary terms. This is essential because traditional accounting practices only deal with tangible assets and overlook the intangible aspects of a business like human capital. Human resource accounting enables the organization to:
Assign monetary value to the human resources of the company for the purposes of measurement and assessment.
It helps in the determination of the return on investment (ROI) for human resources.
It assists in the measurement of the effectiveness of human resource management programs.
It supports strategic planning and decision-making by providing vital information about the company's human resources.
It helps in the identification of areas where the company can invest in improving its human resources.
Thus, human resource accounting helps organizations understand the value of their employees and the role they play in achieving organizational goals.
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A call option has an exercise price of $81 and matures in 4 months. The current stock price is $86, and the risk-free rate is 6 percent per year, compounded continuously. What is the price of the call if the standard deviation of the stock is O percent per year? Multiple Choice O $46.30 O $6.60 O $86.00 O $81.00 O $6.87
The price of the call if the standard deviation of the stock is $46.30.
A call option has an exercise price of $81 and matures in 4 months. The current stock price is $86, and the risk-free rate is 6 percent per year, compounded continuously.
The price of the call option can be calculated using the Black-Scholes formula: C = S*N(d1) - X*e[tex]^{(-rT)}[/tex]*N(d2), where S is the current stock price, X is the exercise price, T is the time to maturity in years, r is the continuously compounded risk-free rate, and d1 and d2 are calculated as follows:
d1 = [ln(S/X) + (r + (σ[tex]^{(2/2)}[/tex])*T]/(σ*sqrt(T))d2 = d1 - σ*sqrt(T), where σ is the standard deviation of the stock price.
The given standard deviation σ is 0, which means that the value of d1 is: d1 = [ln(86/81) + (0.06 + (0[tex]^{(2/2)}[/tex]))*0.33]/(0*sqrt(0.33))
= 2.3521Similarly, the value of d2 is:d2
= 2.3521 - 0*sqrt(0.33)
= 2.3521
Now, the value of N(d1) and N(d2) can be calculated from the cumulative normal distribution tables or using a calculator. N(d1) = 0.9907N(d2) = 0.9886.
Using these values, the price of the call option can be calculated as:C = S*N(d1) - X*e[tex]^{(-rT)}[/tex]*N(d2)
= 86*0.9907 - 81*e[tex]^{(-0.06*0.33)}[/tex]*0.9886
= $46.30. Therefore, option (A) $46.30 is the correct option.
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Save Anover Manama Company had $700,000 in sales, sales discounts of $20,000, sales returns and allowances of $10,000, cost of goods sold of $300,000, and $200,000 in operating expenses. Gross profit equals $170,000 $370,000 $230,000 $430,000
Based on the given information, the gross profit for Save Anover Manama Company is $370,000
To calculate the gross profit, we need to subtract the cost of goods sold from net sales. Net sales can be determined by subtracting the sales discounts and sales returns and allowances from total sales.
Total sales - Sales discounts - Sales returns and allowances = Net sales
$700,000 - $20,000 - $10,000 = $670,000
Next, we subtract the cost of goods sold from net sales to find the gross profit.
Net sales - Cost of goods sold = Gross profit
$670,000 - $300,000 = $370,000
Therefore, the gross profit is $370,000.
In conclusion, based on the given information, the gross profit for Save Anover Manama Company is $370,000. This indicates the company's profit after accounting for the cost of goods sold but before deducting operating expenses.
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There are three work centers (A, B, and C) behind the financial aid counter at a nearby university. They can each fit into any of three office spaces (1, 2, and 3) off the corridor behind the desk. There is no student contact in these areas, only workers. The distance 1-2 is 20 feet, 2-3 is 30 feet, and 1-3 is 50 feet. The matrix of work (trips per day) at the three centers are shown in the following table. Remember that each trip must be a round-trip (from 1 to 2 and back, for example). (Marks 10) A B с А 20 0 B 25 45 60 C 0 a. b. How many possible assignments are there? List them. Calculate the total distance traveled in each of these assignments. Which assignment minimizes distance traveled?
To determine the possible assignments and calculate the total distance traveled, we can analyze the given information and the matrix of work trips per day at the three centers:
The matrix of work trips per day is as follows:
A B C
A 20 0 0
B 25 45 60
C 0 0 0
Let's consider the possible assignments and calculate the total distance traveled for each assignment:
Assignment 1: A - Office 1, B - Office 2, C - Office 3
Total Distance = Distance(1-2) + Distance(2-3) + Distance(1-3) = 20 + 30 + 50 = 100 feet
Assignment 2: A - Office 1, B - Office 3, C - Office 2
Total Distance = Distance(1-2) + Distance(2-3) + Distance(1-3) = 20 + 30 + 50 = 100 feet
Assignment 3: A - Office 2, B - Office 1, C - Office 3
Total Distance = Distance(1-2) + Distance(2-3) + Distance(1-3) = 20 + 30 + 50 = 100 feet
Assignment 4: A - Office 2, B - Office 3, C - Office 1
Total Distance = Distance(1-2) + Distance(2-3) + Distance(1-3) = 20 + 30 + 50 = 100 feet
Assignment 5: A - Office 3, B - Office 1, C - Office 2
Total Distance = Distance(1-2) + Distance(2-3) + Distance(1-3) = 20 + 30 + 50 = 100 feet
Assignment 6: A - Office 3, B - Office 2, C - Office 1
Total Distance = Distance(1-2) + Distance(2-3) + Distance(1-3) = 20 + 30 + 50 = 100 feet
There are a total of six possible assignments, and each assignment results in a total distance of 100 feet traveled. Therefore, all of the assignments have the same minimum distance traveled.
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Suppose your company has developed a product that every person in the world needs (perhaps a life saving pharmaceutical vaccine for a pandemic virus), but it has to be manufactured close to each market you sell in due to limited shelf-life and requirements for temperature control. How would you meet the challenges of doing business in a diverse world, as discussed on pages 81-88 of our textbook? For example, would you form a joint-venture manufacturing company with a state owned enterprise (SOE) if that government was oppressive to it's people? Would you use a Licensing Agreement in various countries to allow established businesses to manufacturing the vaccine quickly? How would you price the vaccine to third world countries? Is it more important to make the greatest return for your shareholders or save the greatest number of lives? Discuss your plan for global manufacturing and distribution and how you would navigate the sensitive political, economic and social issues of a diverse world. Remember to support your decisions with facts and references.
To meet the challenges of doing business in a diverse world, I would adopt a multi-faceted approach that encompasses joint-ventures, licensing agreements, and equitable pricing strategies for third world countries.
How would forming a joint-venture manufacturing company with a state-owned enterprise (SOE) be influenced by an oppressive government?While forming a joint-venture with an SOE may provide benefits such as access to local infrastructure and resources, the decision would be influenced by the political situation and human rights record of the government.
Engaging with an oppressive regime could raise ethical concerns and potentially damage the reputation of the company. It would be essential to carefully assess the potential risks and align with international standards for corporate social responsibility.
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If the central bank directly targets the interest rate in response to a RISE in income, the central bank will: increase the money supply. increase the target interest rate reduce the target interest rate. reduce the money supply. keep the money supply constant.
If the central bank directly targets the interest rate in response to a rise in income, the central bank will typically reduce the target
interest
rate.
When income rises, it often leads to increased economic activity and higher
demand
for loans. To stimulate borrowing and investment, the central bank may respond by reducing the target interest rate. By lowering interest rates,
borrowing
costs decrease, making it more attractive for individuals and businesses to take out loans and invest in various economic activities. This expansionary monetary
policy
aims to encourage spending and boost economic growth.
It's important to note that the central bank's decision to adjust the interest rate can also depend on various factors such as
inflation,
employment levels, and overall economic conditions. Therefore, the specific response of the central bank may vary in different situations.
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During January, the second month of operations, the following transactions were completed by ABC Corporation:
Jan 1 ABC Corporation issues a $1,000,000, 6%, five-year bond that pays semiannual interest of $30,000 ($1,000,000 ×6% × ½ ), receiving cash of $936,420. Journalize the entry to record the issuance of the bonds.
Jan 1 ABC Corporation purchased $800,000 of Ridge County, 7.5% bonds at their face amount. The bonds pay interest monthly on the last day of the month.
Jan 3 ABC sold $60,000 of merchandise on account to Best Company, 2/10, n/30, FOB shipping point. The cost of merchandise sold was $20,000. ABC uses the net method to account for sales.
Jan 6 Purchased merchandise inventory from Grace Company for $105,000, terms n/eom, FOB destination.
Jan 8 Paid adverting costs of $2,000 to promote new business.
Jan 10 ABC Corporation purchased a delivery truck by issuing a 30-day, 6% note with a face amount of $60,000.
Jan 13 ABC receives payment from Best Company within the discount period.
Jan 16 ABC sold $55,000 of merchandise on account to Great Company, n/eom, FOB shipping point. The cost of merchandise sold was $15,000. ABC uses the net method to account for sales.
Jan 20 Paid $1200 for utilities.
Jan 25 ABC's Board of Directors declared a $42,000 cash dividend.
Jan 27 Sold 100 shares of treasury stock for $18 per share.
Jan 30 ABC Corporation received $50,000 on the Jan 16 sale. The remaining $5,000 was written off.
Jan 31 For the month ended January 31, Ridge County paid interest on bonds
Jan 31 The amount of cash in the the petty cash fund is $13. Issued a check to replinish the fund to its original $100 based on the following petty cash receipts: Office Supplies $32 and Misc items, $55.
At the end of January, the following adjustment data were assembled.
a After a physical count of inventory, it was determined that $238,700 of inventory exists at January 31.
b Based on an analysis of A/R, ABC Company anticipates 3% of A/R to be uncollectible.
c Buildings were purchased on Dec 1 of the prior year and are depreciated using the straight line method with no salvage value for 30 years. Round to the nearest dollar. ABC Corporation uses the mid-month convention for to calculate depreciation on all fixed assets (round to the nearest month).
d Store Fixtures were purchased on Dec 1 of the prior year and are depreciated using the straight-line method with no salvage value for 5 years. Round to the nearest dollar. ABC Corporation uses the mid-month convention for to calculate depreciation on all fixed assets (round to the nearest month).
e Delivery Truck is depreciated using the straight-line method with no salvage value. The estimated life of the truck is 6 years. Round to the nearest dollar. ABC Corporation uses the mid-month convention for to calculate depreciation on all fixed assets (round to the nearest month).
f Amortize the discount on bond payable using the straight-line method.
g Journalize accrued interest on note payable at the end of January.
h Counted office supplies and supplies on hand is $350.
Directions:
1 Journalize the routine transactions above on the Journal-January tab
The journal entries are mentioned for the various transactions along with the adjustments at the end of January.
Jan. 1- Issued a $1,000,000 bond. This 6%, five-year bond pays semi-annual interest of $30,000 ($1,000,000 ×6% × 1/2), with cash proceeds of $936,420. Journalize the entry to record the issuance of bonds. Accounts DR CR Bonds Payable $1,000,000, Cash 936,420, Discount on Bonds Payable $ 63,580. Jan 1- Purchased Ridge County, 7.5% bonds with a face amount of $800,000. The bonds pay monthly interest on the last day of the month. DR CRInvestments $800,000Cash $800,000Jan. 3Sold merchandise inventory on account to Best Company, 2/10, n/30, FOB shipping point, for $60,000. The merchandise’s cost was $20,000. ABC uses the net method for sales. DR CRAccounts Receivable $58,800Sales $60,000Cost of Goods Sold $20,000Merchandise Inventory $20,000
Jan. 6Purchased merchandise inventory from Grace Company for $105,000, n/eom, FOB destination. DR CRMerchandise Inventory $105,000Accounts Payable $105,000Jan. 8ABC Corporation paid $2,000 for advertising expenses to promote new business. DR CRExpenses $2,000Cash $2,000Jan. 10ABC Corporation issued a 30-day, 6% note with a face amount of $60,000 to purchase a delivery truck. DR CRDelivery Truck $60,000Notes Payable $60,000Jan. 13Received payment from Best Company within the discount period. DR CRAccounts Receivable $58,584Cash $57,198Sales Discount Forfeited $1,386Jan. 16Sold merchandise inventory on account to Great Company, n/eom, FOB shipping point, for $55,000. The merchandise’s cost was $15,000.
ABC uses the net method for sales. DR CRAccounts Receivable $55,000Sales $55,000Cost of Goods Sold $15,000Merchandise Inventory $15,000Jan. 20Paid $1,200 for utilities. DR CRExpenses $1,200Cash $1,200Jan. 25Declared a $42,000 cash dividend by the ABC board of directors. DR CRDividends Payable $42,000Dividends $42,000Jan. 27ABC Corporation sold 100 shares of treasury stock for $18 per share. DR CRCash $1,800Treasury Stock $1,500Paid-In Capital from Treasury Stock $300Jan. 30ABC Corporation received payment of $50,000 on the Jan 16 sale. The remaining $5,000 was written off. DR CRCash $50,000Accounts Receivable $50,000
Jan. 31 For the month ending January 31, Ridge County paid interest on bonds. DR CRInterest Receivable $30,000Interest Revenue $30,000 Jan. 31 The amount of cash in the petty cash fund is $13. Issued a check to replenish the fund to its original $100 based on the following petty cash receipts: Office Supplies $32 and Misc items, $55. DR CRPetty Cash $100Office Supplies Expense $32Miscellaneous Expense $55Cash $187Jan. 31Adjustment: a. After a physical inventory count, it was determined that $238,700 of inventory existed on January 31. DR CRMechandise Inventory $238,700Cost of Goods Sold $238,700b. Based on an analysis of A/R, ABC Company anticipates 3% of A/R to be uncollectible. DR CRRBad Debt Expense $1,374Accounts Receivable $1,374c. Buildings were purchased on Dec 1 of the prior year and are depreciated using the straight-line method with no salvage value for 30 years, round to the nearest dollar.
ABC Corporation uses the mid-month convention to calculate depreciation on all fixed assets (round to the nearest month). DR CRDepreciation Expense (Building) $1,333Building $1,333d. Store Fixtures were purchased on Dec 1 of the prior year and are depreciated using the straight-line method with no salvage value for 5 years, round to the nearest dollar. ABC Corporation uses the mid-month convention to calculate depreciation on all fixed assets (round to the nearest month). DR CRDepreciation Expense (Store Fixtures) $1,750Store Fixtures $1,750e. Delivery Truck is depreciated using the straight-line method with no salvage value. The estimated life of the truck is 6 years, round to the nearest dollar. ABC Corporation uses the mid-month convention to calculate depreciation on all fixed assets (round to the nearest month). DR CRDepreciation Expense (Delivery Truck) $500Delivery Truck $500f.
Amortize the discount on bond payable using the straight-line method. DR CRBond Interest Expense $3,180Discount on Bonds Payable $3,180 ($63,580 ÷ 20 periods)g. Journalize accrued interest on notes payable at the end of January. DR CRInterest Expense $300Interest Payable $300h. Counted office supplies and supplies on hand is $350. DR CRSupplies Expense $0Supplies $0 ($350 – $350). The journal entries are mentioned for the various transactions along with the adjustments at the end of January.
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A $3000, 8.5% bond redeemable at par in seven years bears coupons payable annually. Compute the premium or discount and the purchase price if the yield, compounded annually, is 7%, 8%, and 9%. The purchase price of the 7% yield bond is _____$. The 7% yield bond is sold at a premium of ______$. The purchase price of the 8% yield bond is __________$. The 8% yield bond is sold at a premium of _____$
The purchase price of the 7% yield bond is $3280.63, and it is sold at a premium of $280.63.
The purchase price of the 8% yield bond is $3635.40, and it is sold at a premium of $635.40.
To calculate the premium or discount and the purchase price of the bond at different yield rates, we can use the present value formula for a bond:
Purchase Price = Coupon Payment x [1 - (1 / (1 + Yield)^Number of Years)] / Yield + Par Value / (1 + Yield)^Number of Years.
Let's calculate the purchase price and the premium/discount for each yield rate:
For a 7% yield:
Coupon Payment = $3000 x 8.5% = $255.
Number of Years = 7.
Yield = 7%.
Purchase Price = $255 x [1 - (1 / (1 + 0.07)^7)] / 0.07 + $3000 / (1 + 0.07)^7.
= $255 x (1 - 0.508857) / 0.07 + $3000 / 1.508857.
= $1294.11 + $1986.52.
= $3280.63.
The purchase price of the 7% yield bond is $3280.63.
The 7% yield bond is sold at a premium of $3280.63 - $3000 = $280.63.
For an 8% yield:
Coupon Payment = $255.
Number of Years = 7.
Yield = 8%.
Purchase Price = $255 x [1 - (1 / (1 + 0.08)^7)] / 0.08 + $3000 / (1 + 0.08)^7.
= $255 x (1 - 0.467151) / 0.08 + $3000 / 1.467151.
= $1588.42 + $2046.98.
= $3635.40.
The purchase price of the 8% yield bond is $3635.40.
The 8% yield bond is sold at a premium of $3635.40 - $3000 = $635.40.
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Pick only two scenarios and answer the questions, for Sales and Leases.
Ben owns fifty acres of timberland. He enters into a contract with Bunyan under which Bunyan is to cut and remove the timber from Ben's land. Bunyan enters into a contract to sell the logs to Log Cabin, Inc., a homebuilder. Are these two contracts governed by the UCC? Why?
Clarence agreed to sell his farm to Jud in exchange for five antique cars owned by Jud. Is this contract governed by the UCC? Why?
Professor Byte enters into a contract to purchase a laptop computer from Ultra-Intelligence Inc. He also enters into a contract with a graduate student, who is to write programs that will be run on the computer. Are these two contracts governed by the UCC? Why?
Bill, the owner of Bill's Used Books, decided to go out of business. He sold two of his bookcases to Ned. Ned later discovered that the bookcases were defective and sued Bill on the theory that, as a merchant, he warranted that the bookcases were of fair, average quality. Will Ned prevail on this theory? Why?
The scenarios picked up for Sales and Leases are scenarios 1 and scenario 3.
Scenario 1:
Yes, the contracts are governed by the UCC as the sale of the logs by Bunyan to Log Cabin, Inc., comes under the sale of goods as defined by the UCC. The contract between Bunyan and Ben is a contract for the services that are outside the scope of the UCC.
Scenario 3:
The contract between Professor Byte and Ultra-Intelligence Inc. for the purchase of a laptop computer is governed by the UCC as it falls under the sale of goods definition under the UCC. However, the contract between Professor Byte and the graduate student for the writing of programs is not governed by the UCC as it is a contract for services outside the scope of the UCC.
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Your parents will retire in 19 years. They currently have $300,000 saved, and they think they will need $1,050,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.
Your parents would need to earn an annual interest rate of approximately 6.37% to accumulate $1,050,000 at retirement, assuming they don't save any additional funds.
To determine the required annual interest rate for your parents to reach their retirement goal, we can use the formula for compound interest:
FV = PV × (1 + r)^n
FV = Future value (desired retirement savings) = $1,050,000
PV = Present value (current savings) = $300,000
r = Annual interest rate
n = Number of years until retirement = 19
Rearranging the formula to solve for the interest rate (r), we have:
r = (FV / PV)^(1/n) - 1
Plugging in the values, we can calculate the required interest rate:
r = ($1,050,000 / $300,000)^(1/19) - 1 ≈ 0.0637
Converting the decimal to a percentage, we find that your parents must earn an annual interest rate of approximately 6.37% to reach their retirement goal.
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Companies may issue different classes of common shares. Which of the following is true regarding share classes?
Select one:
a. One class of common share may be entitled to more votes per share than another class of common shares
b. Regardless of class, all common shares must have the same voting rights.
c. Regardless of class, all common shares must pay the same dividends.
d. All firms have at least two classes of common shares.
Companies issue different classes of common shares to allow for varying levels of voting rights, dividend payments, When it comes to share classes, one class of common share may be entitled to more votes per share than another class of common shares. Option (a) is correct answer
The board of directors can create multiple classes of shares with different rights and privileges. The rights and privileges of each share class are specified in the articles of incorporation. The most common types of share classes are Class A, Class B, and Class C.
Share classes may have different voting rights, dividend payments, conversion rights, and redemption rights. The board of directors has the authority to create additional share classes if they deem it appropriate.Common shares are usually classified into two types, namely voting shares and non-voting shares.
In general, voting shares provide shareholders with the right to vote on important corporate matters, such as electing the board of directors, approving mergers and acquisitions, and deciding on other significant business decisions.
Additionally, some companies may have a third class of shares, such as Class C shares, which may have fewer voting rights than Class A shares but more voting rights than Class B shares.
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BB is a major British multinational retailer with headquarters in London, England, that specialises in selling clothing, home products and food products. BBis an all-equity firm with 80 million shares outstanding, which are currently trading for £ 3.5 per share. A month ago, BB announced it will change its capital structure by borrowing £50 million in short-term debt, borrowing £50 million in long-term debt, and issuing £50 million of preferred stock. The £150 million raised by these issues, plus another £25 million in cash that BB already has, will be used to repurchase existing shares of stock. The transaction is scheduled to occur today. Assume that BB is functioning in perfect capital market. a) What is the market value balance sheet for BB in following three situations. i. Before this transaction. ii. After the new security issued but before the share repurchases iii. After the share repurchases b) How many shares outstanding will BB have after the share repurchase, and what will the value of those shares be? c) Explain what Modigliani and miller proposition one and two says [3 marks]
After issuing new securities and repurchasing shares, BB's balance sheet will show a decrease in equity and an increase in liabilities. The number of shares outstanding will decrease, and the value of the remaining shares will increase.
Here is the market value balance sheet for BB in the three situations:
Before this transaction:
Assets: £25 million in cash and clothing, home products, and food products.
Liabilities: None.
Equity: £280 million (80 million shares x £3.5 per share).
After the new security issued but before the share repurchases:
Assets: £25 million in cash, clothing, home products, food products, £50 million short-term debt, £50 million long-term debt, and £50 million preferred stock.
Liabilities: £50 million short-term debt, £50 million long-term debt, and £50 million preferred stock.
Equity: £280 million (80 million shares x £3.5 per share).
After the share repurchases:
Assets: £25 million in cash, clothing, home products, and food products.
Liabilities: £50 million short-term debt and £50 million long-term debt.
Equity: £130 million (80 million shares - 15 million shares repurchased) x £3.5 per share.
b.) After the share repurchase, the number of shares outstanding will depend on the amount of shares repurchased. The value of the remaining shares will be calculated as follows: (80 million - shares repurchased) x £3.5 per share.
c.) Modigliani and Miller Proposition One states that, in a perfect capital market, the value of a firm is determined by its cash flows and is independent of its capital structure. This means that the way a firm finances its investments (through debt or equity) does not affect its overall value.
Modigliani and Miller Proposition Two extends this idea by stating that the cost of equity increases as the firm's leverage (debt) increases. This is due to the higher financial risk associated with increased debt levels. According to this proposition, the cost of equity is directly proportional to the firm's leveraged beta.
These propositions highlight the concept of capital structure irrelevance and the importance of cash flows in determining firm value, regardless of the mix of debt and equity used for financing.
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What are different ways a firm can reduce agency conflict between managers and shareholders? Explain your answers in reference to the materials covered in this unit.
There are several ways a firm can reduce agency conflicts between managers and shareholders:
Performance-Based Compensation: By tying managers' compensation to the firm's performance, such as through stock options or bonuses based on financial targets, managers are incentivized to act in the shareholders' best interests.Board of Directors Oversight: An independent and active board of directors can provide oversight and hold managers accountable, reducing the potential for managerial opportunism.Shareholder Activism: Shareholders can actively engage in corporate governance by voting on important matters, proposing changes, or forming activist groups to advocate for their interests, thus exerting pressure on managers to act in their best interests.Transparency and Disclosure: Providing clear and timely information to shareholders enhances transparency and helps reduce information asymmetry, enabling shareholders to monitor managers effectively.Takeover Threat: The possibility of a takeover acts as a disciplinary mechanism, as managers are more likely to act in shareholders' interests to avoid being replaced by a more efficient management team.Learn more about shareholders here : brainly.com/question/28170754
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The 4 "P" 's of Marketing
While they all have a purpose, rank them in order of what you think
to be the most important and why.
Reply
The 4 "P"s of Marketing are Product, Price, Place, and Promotion. These 4Ps are important elements in the process of marketing. However, each of them plays a unique and specific role. They are ranked in order of importance below:Product: This is the main answer and the most important of the 4 Ps of marketing.
It refers to the goods or services that are offered to customers. A product can either be physical or intangible, and it has to be designed in such a way that it meets the needs of the customersPrice: This is the second most important of the 4 Ps of marketing. It refers to the amount of money a customer must pay to acquire a product. It is very important for the price of a product to be reasonable because it determines the number of customers who will be willing to purchase it.Place: This is the third most important of the 4 Ps of marketing. It refers to the location where a product is sold. A product has to be made available to customers in locations that are convenient for them. This will ensure that customers can easily access the product and purchase it.:
This is the fourth most important of the 4 Ps of marketing. It refers to the strategies used to communicate the benefits of a product to potential customers. Promotion includes advertising, personal selling, sales promotion, and public relations. While it is important, it is not as important as the other 3 Ps because even if a product is well-promoted, it may not sell if it is not of good quality, if the price is too high or if it is not easily available in the right location.:The 4Ps of marketing are important in the marketing process. These 4Ps include Product, Price, Place, and Promotion. These elements are important because they help businesses to attract, retain, and satisfy customers. However, each of these elements plays a unique and specific role. Therefore, it is important to rank them in order of importance. The product is the most important of these elements because it is the main thing being sold. The other three elements are also importan but are not as important as the product because they support the product.
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4. When Interest rate changes, the impact on a bank's earnings depends on the repricing of their assets or liabilities. = $250 Loan A (6%, 1 year) = $100 Loan B (9%, 2 years) = $200 Total Assets Deposit A (3%, 3 months) Deposit B (5%, 1 year) Total Liabilities = $50 = $300 =$300 a. The average maturity of its assets is larger than that of its deposits, as is typical of most banks. The net interest margin or spread is ( 4.7% ). b. Assume that the deposit rates three months later increase from 3% to 4.5%. The spread will be reduced to ( 3.42% from 4.7%.
a. Since the average maturity of the assets (1.29 years) is larger than that of the deposits (0.86 years), statement (a) is correct.
b. The new spread after the deposit rate increase would be approximately 2.41%, which is lower than the previous spread of 4.7%. Statement (b) is correct.
To analyze the impact of the interest rate changes on a bank's earnings, we need to calculate the net interest margin or spread before and after the changes.
Loan A: $250 (6%, 1 year)
Loan B: $100 (9%, 2 years)
Total Assets: $350 ($250 + $100)
Deposit A: $50 (3%, 3 months)
Deposit B: $300 (5%, 1 year)
Total Liabilities: $350 ($50 + $300)
a. To calculate the average maturity of the assets and deposits:
Average Maturity of Assets = (Loan A * 1 year + Loan B * 2 years) / Total Assets
= ($250 * 1 + $100 * 2) / $350
= 1.29 years (approximately)
Average Maturity of Deposits = (Deposit A * 3/12 + Deposit B * 1 year) / Total Liabilities
= ($50 * 3/12 + $300 * 1) / $350
= 0.86 years (approximately)
Since the average maturity of the assets (1.29 years) is larger than that of the deposits (0.86 years), statement (a) is correct.
b. Now, let's calculate the new spread after the deposit rate increase to 4.5%:
New Spread = (Loan A * 6% + Loan B * 9%) - (Deposit A * 3/12 * 4.5% + Deposit B * 1 * 5%)
= ($250 * 0.06 + $100 * 0.09) - ($50 * 0.25 * 0.045 + $300 * 0.05)
= ($15 + $9) - ($0.5625 + $15)
= $24 - $15.5625
= $8.4375
The new spread is $8.4375.
To calculate the new spread as a percentage of average interest-earning assets:
New Spread % = (New Spread / Total Assets) * 100
= ($8.4375 / $350) * 100
= 2.41% (approximately)
Therefore, the new spread after the deposit rate increase would be approximately 2.41%, which is lower than the previous spread of 4.7%. Statement (b) is correct.
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The theoretical output that could be attained if a process were operating at a full speed without interruption is called A. Maximum capacity B. Effective capacity C. Capability D. Efficiency E. Design capacity
The theoretical output that could be attained if a process were operating at full speed without interruption is called Design capacity (E). Design capacity refers to the maximum output that can be achieved based on the process design, equipment capabilities, and other factors, assuming ideal operating conditions and no interruptions or downtime.
Option A, Maximum capacity, refers to the highest output level that a process or system can achieve under specific conditions, taking into account potential disruptions or limitations. Option B, Effective capacity, is the actual achievable output considering factors such as equipment efficiency, scheduled maintenance, and employee availability. Option C, Capability, generally refers to the overall ability or potential of a system or process to perform certain tasks. Option D, Efficiency, refers to the ratio of actual output to the standard or expected output, indicating how well resources are utilized.
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canlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: rRF = 4.10%; RPM = 5.10%; and b = 1.10. Based on the CAPM approach, what is the cost of equity from retained earnings?
a. 10.12%
b. 9.61%
c. 9.20%
d. 9.71%
e. 10.30%
Based on the given data, the cost of equity from retained earnings using the CAPM approach is 9.71%, option (d) is correct.
To calculate the cost of equity from retained earnings using the Capital Asset Pricing Model (CAPM) approach, we can use the formula
Cost of Equity = rRF + (RPM * β).
Given the provided data:
rRF = 4.10%
RPM = 5.10%
β = 1.10
we can substitute the values into the formula.
Cost of Equity = 4.10% + (5.10% * 1.10)
= 4.10% + 5.61%
= 9.71%.
Therefore, the cost of equity from retained earnings, based on the CAPM approach, is 9.71%.
This calculation is based on the assumption that the risk-free rate (rRF) is 4.10%, the risk premium (RPM) is 5.10%, and the company's beta (β) is 1.10. These values are used to estimate the required return on equity, taking into account the risk associated with the company's stock, option (d) is correct.
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Sweet Lemon Pty Ltd is a small business selling different kinds
of organic tea leaves. They sell their products online and directly
from their store. Sale made from the internet was $20,000 (Ex GST),
The total assessable income for Sweet Lemon Pty Ltd is $68,000.
Assessable income refers to the income which is subject to tax after excluding all allowable deductions. In the given scenario, Sweet Lemon Pty Ltd is a small business that sells organic tea leaves through online and store sales. The business has different sources of income, such as cash sales, online sales, non-trading stock sales, and a cash prize.
The calculation of total assessable income for Sweet Lemon Pty Ltd is given below:
Cash sales $15,000
Non-trading stock sales $4,000
Online sales $20,000
Cash prize $10,000
JobKeeper Payment $21,000
Total income $70,000
However, the interest paid on borrowed money from the bank is an allowable deduction from the assessable income. If the interest paid by the Sweet Lemon Pty Ltd on the loan is $2000, the net assessable income can be calculated as below:
Total income $70,000
Interest paid on loan ($2000)
Net Assessable income $68,000
Therefore, the total assessable income is $68,000.
Note: The question is incomplete. The complete question probably is: Sweet Lemon Pty Ltd is a small business selling different kinds of organic tea leaves. They sell their products online and directly from their store. Sale made from the internet was $20,000 (Ex GST), and cash sales were $15,000(Ex GST). They also made some profit from selling non-trading stock (furniture) of $4000. The business was recognized for its quality product and good customer service during the current tax year. Cash prize received for being the best business in their region $10,000. Unfortunately, due to covid, the business lost revenues and accepted a job keeper payment of $21000. The business also borrowed $50,000 to run its operation from a bank. Analyze the above incomes for Sweet Lemon Pty Ltd and show a detailed calculation for the total assessable income.
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Consider the economy with capital and labor as the only inputs. The labor share of GDP is 25%, the rate of technological progress is 2%, the depreciation rate is 6% and population grows at 2%. a) Find the Cobb-Douglas production function per worker. b) If the economy is in steady state, find the capital, output per worker and the marginal product of capital. Assume that the economy saves 30% of GDP. c) Suppose that public policy alters the saving rate so that the economy reaches the Golden Rule level of capital. What will the marginal product of capital be at the Golden Rule steady state? Compare the marginal product at the Golden Rule steady state to the marginal product in the initial steady state. Explain. What is the level of capital per worker at the Golden Rule steady state? d) Consider the case when the economy saves only 15% of GDP. How the steady state levels of capital change? Explain
The correct answer of a) [tex]Y = A * K^0.75 * (L)^0.25[/tex], b) MPK = δ = 0.06, c) the saving rate (s) at the Golden Rule steady state is still 30%., d) The new steady-state level of capital per worker (K') is 2.5 times
a) The Cobb-Douglas production function per worker is given by:
Y = A * K^α * (L)^(1-α)
where:
Y is output per worker,
A is the level of technology,
K is the amount of capital per worker,
L is the amount of labor per worker, and
α is the capital share of income.
In this case, the labor share of GDP is 25%, so the capital share of income (α) would be 1 - 0.25 = 0.75.
Therefore, the Cobb-Douglas production function per worker is:
[tex]Y = A * K^0.75 * (L)^0.25[/tex]
b) In the steady state, capital per worker (K) is constant, output per worker (Y) is constant, and the marginal product of capital (MPK) equals the depreciation rate.
Given the saving rate (s) of 30% of GDP, the investment per worker (I) would be:
I = s * Y
Since the economy is in steady state, the investment per worker equals the depreciation per worker (δ):
I = δ * K
Therefore:
s * Y = δ * K
Given the population growth rate (g) of 2% and the technological progress rate (n) of 2%, the growth rate of output per worker (gY) would be:
gY = n + g
In the steady state, gY is zero:
0 = n + g
0 = 0.02 + 0.02
Therefore, the output per worker (Y) is constant.
Now, let's find the capital per worker (K) in the steady state:
s * Y = δ * K
0.3 * Y = 0.06 * K
Since Y is constant, we can denote it as Y*.
0.3 * Y* = 0.06 * K
K = (0.3 / 0.06) * Y*
K = 5 * Y*
So, the capital per worker (K) is 5 times the output per worker (Y).
The marginal product of capital (MPK) equals the depreciation rate (δ):
MPK = δ = 0.06
c) In the Golden Rule steady state, the marginal product of capital (MPK) is maximized. To find the saving rate (s) at the Golden Rule steady state, we need to set the MPK equal to the rate of technological progress (n):
MPK = n
0.06 = 0.02
To maximize the MPK, we need to find the level of capital per worker (K) at the Golden Rule steady state. We can set the MPK equation equal to the steady-state equation:
MPK = δ = s * Y / K
0.06 = s * Y* / K
0.06 = s * Y* / (5 * Y*)
0.06 = s / 5
s = 0.06 * 5
s = 0.3
So, the saving rate (s) at the Golden Rule steady state is still 30%.
The marginal product of capital (MPK) at the Golden Rule steady state is the same as the rate of technological progress (n), which is 2%.
The level of capital per worker (K) at the Golden Rule steady state is the same as in the initial steady state, which is 5 times the output per worker (Y).
d) If the economy saves only 15% of GDP, the saving rate (s) is decreased to 0.15.
Using the same equations as before, we can find the new level of capital per worker (K'):
s * Y = δ * K'
0.15 * Y = 0.06 * K'
K' = (0.15 / 0.06) * Y*
K' = 2.5 * Y*
The new steady-state level of capital per worker (K') is 2.5 times the output per worker (Y), which is lower than the initial steady state.
In summary, if the saving rate is reduced to 15%, the steady-state level of capital per worker decreases, leading to a lower level of output per worker and a reduced marginal product of capital.
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Question 86 2 pts A firm is producing 1,000 units at a total cost of $5,000. If it were to increase production to 1,001 units, its total cost would rise to $5,008. What does this information tell you about the firm? O MC=$8, ATC=$5 O MC=$8, AVC = $5 O MC=$5, ATC=$8 O MC = $5, AFC=$8
The information suggests that the marginal cost (MC) of producing an additional unit is $8.
Marginal cost (MC) is the cost of producing one additional unit of output. In this scenario, when the firm increases production from 1,000 units to 1,001 units, the total cost rises from $5,000 to $5,008. Therefore, the cost of producing the 1,001st unit is $8 ($5,008 - $5,000).
It is important to note that the fixed cost (FC) remains the same, as it does not change with the level of production. Only the variable cost (VC) increases with the production of each additional unit. In this case, the variable cost of producing the 1,001st unit is $8.
Based on the given information, the marginal cost (MC) of producing an additional unit is $8. This indicates that the cost of producing each additional unit is $8, suggesting that there might be increasing costs associated with higher levels of production for this firm.
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Answer the 3 questions below. Provide the reasoning behind your answer AND comment on another student's post (provide constructive feedback).
Think of a company from which you buy a product or service (any company, online/store front). Specify when and where you share data with that company.
Do you believe the company does a good job collecting data from these encounters? Why? (Respond in at least 3 sentences)
Now, think of another company from which you have purchased a product and been disappointed. Identify the CRM process that may be at fault. Specify how that process could be improved. (Respond in at least 3 sentences)
The company from which I buy a product is Amazon. I share my data with Amazon every time I make a purchase. The company collects information from my purchases, searches, and other activities on the website to provide me with personalized recommendations, advertisements, and other services.
Amazon does a good job collecting data from these encounters. The company is committed to protecting customer data and follows strict data protection protocols. In addition, Amazon uses artificial intelligence to analyze the data and provides customers with recommendations and other personalized services. However, one area where Amazon could improve is in providing more transparency about how it uses customer data. The company should provide more information about what data it collects, how it uses the data, and how customers can control their data privacy.The company from which I have purchased a product and been disappointed is a local clothing store. The CRM process that may be at fault is the customer service. The store's customer service representatives were unresponsive and unhelpful when I had an issue with a product. To improve the CRM process, the store could implement better training for its customer service representatives, create a more user-friendly return policy, and offer discounts or other incentives to customers who have had negative experiences.
In addition, the store could implement a system for customers to provide feedback on their experiences, which would allow the store to identify areas for improvement.
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Chapter 4 Matching ✓ Business needs which must be accomplished by an information system 1. DFD ✓ Business process quality constraints that describe how a system must meet business needs 2. Agile Methods 3. Use Case ✓ Ability to respond to future expanding volume of business needs ✓ REly on high levels of technical expertise and interpersonal skills 4. Interviews ✓ Are most appropriate when using leading or open-ended questions 5. FDD 6. Functional Requirement ✓ Could involve evaluating key job reponsibility contracts to determine tasks associated with a business role 7. Scalability Work best with closed-ended questions 8. Non-functional Requirement Graphical representation of the hierarchical nature of business processes 9. Surveys Graphical representations of business processes and their interactions with each other to transform information 10. Document Review Generally, requires both a graphical depiction and written descriptions showing step-by-step execution of a business process
"Business needs refer to the specific requirements and objectives that a business or organization seeks to fulfill in order to achieve its goals and objectives. "
These needs can vary across different aspects of a business, including operational processes, customer requirements, technology infrastructure, financial goals, regulatory compliance, and strategic initiatives. Business needs can arise from internal factors such as improving efficiency, reducing costs, or enhancing productivity, as well as external factors such as market demands, customer expectations, or competitive pressures. Identifying and addressing business needs is crucial for the successful development and implementation of information systems and other solutions to support and enable the organization's operations and growth.
1. DFD: Graphical representations of business processes and their interactions with each other to transform information.
2. Agile Methods: Ability to respond to future expanding volume of business needs.
3. Use Case: Business process quality constraints that describe how a system must meet business needs.
4. Interviews: Rely on high levels of technical expertise and interpersonal skills. Are most appropriate when using leading or open-ended questions.
5. FDD: Could involve evaluating key job responsibility contracts to determine tasks associated with a business role.
6. Functional Requirement: Generally, requires both a graphical depiction and written descriptions showing step-by-step execution of a business process.
7. Scalability: Work best with closed-ended questions.
8. Non-functional Requirement: Business needs which must be accomplished by an information system.
9. Surveys: Ability to respond to future expanding volume of business needs.
10. Document Review: Generally, requires both a graphical depiction and written descriptions showing step-by-step execution of a business process.
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Suppose that a company has used the discounted payback period for investment appraisal and has found that the project will never recover back the initial investment. What do you recommend the company to do? Explain. Assume that the company does not have any specific optimal payback period
If a company has used the discounted payback period for investment appraisal and has found that the project will never recover back the initial investment, the company should stop the project. The reason for this is because, if the company continues to invest in the project, it will lead to negative cash flows for an indefinite time.
Discounted Payback Period is a capital budgeting technique used to calculate the time it takes for a company to recover its initial investment cost in a project, considering the time value of money, based on the project's net present value (NPV) or discounted cash flow (DCF) analysis.
Furthermore, it will not generate any profits, and the company will continue to incur losses.
Another option the company could consider is finding a way to restructure the project to minimize costs and increase revenue. However, this could prove difficult if the project is not profitable at its current stage, and it may not be possible to restructure it to make it profitable at all.
On the other hand, if the company has not yet started the project, it should reconsider whether to go ahead with it. It is better to abandon the project before incurring any costs than to continue investing in an unprofitable project.
Alternatively, the company could consider investing in other projects that will generate better returns. There is no need to continue investing in an unprofitable project when there are other viable options available.
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Cite three examples of recent decisions that you made in which you, at least implicitly, weighed marginal cost and marginal benefit. In all cases or examples, make sure to clearly identify the cost and benefit. Please also make sure to explain how you arrived at your decision. Do you think you made a rational choice in each case? Explain. (20% of grade)
In each of these cases, I made a rational choice by weighing the marginal cost and marginal benefit of each decision. By considering both the costs and benefits, I was able to make informed decisions that maximized my utility.
Marginal cost is the additional cost that arises from increasing an activity by one unit while marginal benefit is the additional benefit that arises from increasing an activity by one unit. The principle of rational decision-making involves weighing the marginal cost and marginal benefit of a decision.
Below are three examples of recent decisions that I made while weighing marginal cost and marginal benefit:
Example 1: I had to decide whether to spend an additional hour studying or watching TV. The marginal cost of spending an extra hour studying is one hour less of leisure time, while the marginal benefit is the potential for a higher grade. In this case, I chose to study because the marginal benefit of a higher grade outweighed the marginal cost of one hour less of leisure time.
Example 2: I had to decide whether to drive to work or take public transportation. The marginal cost of driving to work is the cost of gas, tolls, and parking, while the marginal benefit is convenience. In this case, I chose to take public transportation because the marginal cost of driving was too high compared to the marginal benefit of convenience.
Example 3: I had to decide whether to buy a brand-name product or a generic product. The marginal cost of the brand name product is the higher price, while the marginal benefit is potentially better quality. In this case, I chose to buy the generic product because the marginal cost of the brand-name product was too high compared to the marginal benefit of potentially better quality.
In each of these cases, I made a rational choice by weighing the marginal cost and marginal benefit of each decision. By considering both the costs and benefits, I was able to make informed decisions that maximized my utility.
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Water Corp. just paid $1.25 dividends and is assumed to grow at 6% per year. The required return of the company is 14%. The present value of the first 60 dividend payments is $16.35 What is the present value of all the dividend payments from year 61 to infinity assuming the required return and the growth rate stay constant? O.25 O.23 O None of the answers is correct O.17 O.21
To calculate the present value of all the dividend payments from year 61 to infinity, we can use the Gordon Growth Model, also known as the dividend discount model.
The formula for the present value of perpetuity is: PV = D / (r - g)
Where:
PV = Present value
D = Dividend payment
r = Required return
g = Growth rate
Given information:
Dividend payment (D) = $1.25
Required return (r) = 14%
Growth rate (g) = 6%
Now let's calculate the present value:
PV = $1.25 / (0.14 - 0.06)
PV = $1.25 / 0.08
PV = $15.625
Therefore, the present value of all the dividend payments from year 61 to infinity, assuming the required return and growth rate stay constant, is $15.625. None of the given answer choices match this value.
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Suppose there is a Chinese firm that could produce a "widget" at a cost of 9qw, where qw is the number of widgets. It can then ship these widgets to a U.S. firm at a transport cost of $1 per unit and for a price of pw. The U.S. firm can then turn one widget into one car at a cost of $10. Cars are then sold on the world market, where inverse demand for cars is given by: P = 500-2Q.
If the Chinese firm is a perfect competitor, what is P =
Pw =
Q = qw =
πU.S = π Chinese =
The Chinese firm will produce widgets up to the point where marginal revenue equals marginal cost. Marginal revenue for the Chinese firm is equal to the price of the car minus the transport cost. Marginal cost for the Chinese firm is equal to the cost of producing a widget.
MR = 500 - 2Q - $1 = 9qw
MC = 9qw
Setting these equal to each other, we get:
500 - 2Q - $1 = 9qw
500 - $1 = 9qw + 2Q
499 = 11qw
qw = 45
The Chinese firm will produce 45 widgets. The U.S. firm will then turn these widgets into 45 cars. The price of a car will be equal to the inverse demand for cars, which is $500 - 2Q. Plugging in Q = 45, we get:
P = 500 - 2(45) = $275
The Chinese firm will sell its widgets to the U.S. firm for $pw. Plugging in qw = 45, we get:
pw = 9(45) = $405
The U.S. firm will then turn these widgets into cars and sell them on the world market for $500 - 2Q. Plugging in Q = 45, we get:
πU.S = (500 - 2(45))(45) = $8100
The Chinese firm will make a profit of $405 per widget, so its total profit will be $405(45) = $18,225.
πChinese = $18,225
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For each of the following calculate the MRS a. U = 3X + Y --> MRS = 1 1 b. U=x2y² --> MRS = 1 2 3 If the utility function and budget constraint are U=X³Y³; 2X + 4y = 120 a. What is the MRS of the utility function? b. What is the slope of the budget constraint? c. What is the optimal bundle of X and Y? d. What is the maximum level of utility the consumer can obtain?
For each of the given utility functions, the MRS (marginal rate of substitution) is calculated. Additionally, the optimal bundle of X and Y, the maximum level of utility the consumer can obtain, and the slope of the budget constraint for a given utility function and budget constraint are also calculated.
1. U = 3X + Y --> MRS = 1MRS for the given utility function is 1.
2. U = x²y³ --> MRS = 3x / 2yMRS for the given utility function is 3x / 2y.
3. Utility function: U = X³Y³; Budget constraint: 2X + 4Y = 120
a. The MRS of the given utility function is (MUx/MUy), which is (3X²Y³)/(3Y²X³) = Y/X.
Therefore, the MRS is Y/X.
b. The slope of the budget constraint is -A/B, which is -2/4 = -1/2.
c. To find the optimal bundle of X and Y, we can use Lagrange's method. We begin by setting up the Lagrange function:
L = X³Y³ + λ (2X + 4Y - 120)
Taking the partial derivative with respect to X, Y, and λ, and setting them equal to 0, we get:
3X²Y³ + 2λ = 0 3Y²X³ + 4λ = 0 2X + 4Y - 120 = 0
Solving the first two equations simultaneously, we get:
Y/X = 4/3λ = -9/4
Substituting these values in the budget constraint equation,
we get:2X + 4(4/3)X = 120 => X = 12Y = (16/3)X
Optimal bundle of X and Y is (12, 16/3).
d. The maximum level of utility that the consumer can obtain can be calculated as U = X³Y³ = 12³ (16/3)³ = 983.04. Therefore, the maximum level of utility the consumer can obtain is 983.04.
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