Feasibility, viability, and desirability are vital factors in assessing a project or business idea.
They interrelate to evaluate the practicality, potential success, and value of an idea respectively, ensuring its overall sustainability and profitability.
Feasibility relates to whether a project can be done given existing resources, technologies, and constraints. It assesses practicality from a technical and operational perspective. Viability pertains to the potential for a project to be financially successful. It includes assessing costs, revenues, and the market environment to ascertain if the project will be profitable. Desirability, on the other hand, evaluates whether there is a need or demand for the product or service, focusing on user preferences and market trends. All three are interrelated. A feasible project may not be viable if costs outweigh revenues. Similarly, a viable project may not be desirable if there's no market demand. Conversely, a desirable project may not be feasible if technical or resource constraints exist. Therefore, a balance of feasibility, viability, and desirability is needed for a project to succeed.
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Discuss five ways that the schedule to prepare for increased business could be limited and how you would manage with each type of limitation
When preparing for increased business, it is important to consider the limitations that may occur. Here are five ways that the schedule to prepare for increased business could be limited and how to manage each type of limitation:
1. Limited resources: This may include limited staff, funds, or materials. To manage this limitation, you can prioritize tasks and allocate resources effectively. For example, focus on hiring essential staff or utilizing existing staff effectively to maximize productivity. You can also reduce unnecessary expenses and prioritize the purchase of critical materials.
2. Limited time: This may occur due to a tight deadline or a large number of tasks to be completed. To manage this limitation, you can break down tasks into smaller, more manageable steps, and delegate tasks to a team. You can also utilize project management software to track progress and ensure tasks are completed on time.
3. Limited space: This may occur if you have a small facility or if you are expanding too quickly. To manage this limitation, you can maximize the use of available space and consider temporary solutions, such as renting additional space or utilizing a warehouse.
4. Limited technology: This may occur if you are using outdated or inadequate technology. To manage this limitation, you can research and invest in new technology that will increase efficiency and productivity. You can also provide training for staff to ensure they are utilizing technology effectively.
5. Limited expertise: This may occur if you do not have the necessary skills or experience to handle increased business. To manage this limitation, you can hire experienced consultants or seek guidance from industry experts. You can also provide training for staff to ensure they are prepared to handle new challenges.
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Consider the dollar- and euro-based borrowing opportunities of
companies A and B.
€ borrowing
$ borrowing
A
€
7
%
$
8
%
B
€
6
%
$
9
%
The given question asks us to consider the dollar and euro-based borrowing opportunities of companies A and B. Given,€ borrowingA7%$ borrowingA8%€ borrowingB6%$ borrowingB9% What is meant by borrowing opportunities?The borrowing opportunities refer to the availability of different financing options available to the company.
The companies may borrow money in different currencies or different sources like banks, bonds, or other securities available in the market. By borrowing from different sources, companies can raise capital or finance their projects at lower costs. It depends on the borrowing strategy of the company, which financing option to choose. Factors like interest rates, currency exchange rates, etc. play a vital role in the borrowing strategy. As given, companies A and B have borrowing opportunities in Euros and dollars. Let's analyze the situation of both companies separately.
Company A: For company A, both € and $ borrowing options are available at different interest rates. At present, the interest rate of € borrowing is 7%, and the interest rate of $ borrowing is 8%. Now, depending on the exchange rate between the € and $, the company can choose to borrow from either of the options. Suppose the current exchange rate is favorable for the company to borrow in $ rather than €. In that case, the company will go for the $ borrowing option, which is available at a lower interest rate.
Company B: For company B, the interest rates of € and $ borrowing are 6% and 9%, respectively. Unlike Company A, there is no significant difference in the interest rates of the two borrowing options. The company needs to choose the option with the lowest cost of borrowing, considering the interest rates, fees, and other factors associated with each option. This borrowing decision of the company can impact its financial position and the bottom line. In conclusion, the borrowing opportunities of companies A and B provide different financing options to raise capital at a lower cost. The decision to borrow from any source depends on various factors like interest rates, currency exchange rates, fees, credit rating, maturity, etc.
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What must be the price of a $10,000 bond with a 12% coupon rate,
semi-annual coupons, and seven years to maturity if it has a yield
to maturity of 8%?
Using a financial calculator or spreadsheet, we can calculate the price to be approximately $13,730.81.
To calculate the price of the bond, we need to use the formula for the present value of a bond.
The formula is:
Price = (C / (1 + r)^n) + (C / (1 + r)^(n-1)) + ... + (C / (1 + r)^2) + (C / (1 + r)) + (F / (1 + r)^n)
Where:
- Price is the price of the bond
- C is the coupon payment
- r is the yield to maturity
- n is the number of periods until maturity
- F is the face value of the bond
Given the information in the question, we can substitute the values into the formula:
Coupon payment (C) = $10,000 * 12% / 2 = $600
Yield to maturity (r) = 8%
Number of periods until maturity (n) = 7 years * 2 = 14
Face value (F) = $10,000
Now, let's plug in the values and calculate the price:
Price = ($600 / (1 + 0.08)^14) + ($600 / (1 + 0.08)^13) + ... + ($600 / (1 + 0.08)^2) + ($600 / (1 + 0.08)) + ($10,000 / (1 + 0.08)^14)
Using a financial calculator or spreadsheet, we can calculate the price to be approximately $13,730.81.
Therefore, the price of the bond is $13,730.81.
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Employment law is the collection of
laws and rules that regulate relationships between employers and
employees.
True or False
True.
Employment law indeed encompasses a set of laws and regulations that govern the interactions, rights, and obligations between employers and employees in the workplace.
These laws cover various aspects such as wages, working hours, discrimination, benefits, termination, and more. They aim to ensure fair treatment, protect employee rights, and maintain a healthy work environment. Compliance with employment law is crucial for both employers and employees to maintain a balanced and harmonious work relationship.Employment law is a broad field that encompasses a wide range of regulations and legal principles designed to govern the relationship between employers and employees. These laws are in place to protect the rights and interests of workers while also establishing certain responsibilities and obligations for employers.
Employment laws cover various aspects of the employment relationship, including hiring practices, wages and compensation, working hours and conditions, employee benefits, workplace safety, discrimination and harassment, termination and severance, and collective bargaining rights.
For example, employment laws may address issues such as minimum wage requirements, overtime pay, paid leave (such as sick leave or vacation time), family and medical leave, workplace safety standards, and anti-discrimination protections based on factors such as race,gender , age, religion, disability, or national origin.
Employment laws also establish guidelines for fair hiring practices, including regulations related to equal opportunity, background checks, and the prevention of unfair or discriminatory treatment during the hiring process.
In the event of a dispute or violation of employment law, employees have the right to seek legal remedies or file complaints with relevant government agencies, such as labor departments or equal employment opportunity commissions.
Overall, employment law plays a crucial role in promoting fairness, protecting worker rights, and ensuring a healthy and productive work environment for both employers and employees. Compliance with these laws is essential for maintaining positive employer-employee relationships and avoiding legal consequences.
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Assume that the growth rate (g) of Exxon's common dividend is 4% and itis required rate of return is 12%. Next year it will pay a dividen of $1.50 per share. What would be the appropriate price for Exxon common stock?
O A.$12.7
O B. $13.7
O C.$14.7
O D.$15.7
O E. $16.7
Next year it will pay a dividend of $1.50 per share. The appropriate price for Exxon common stock would be $18.75. Option F is correct .
The appropriate price for Exxon common stock can be calculated using the dividend discount model (DDM). The DDM formula is:
Price = Dividend / (Required Rate of Return - Growth Rate)
In this case, the dividend is $1.50 and the growth rate is 4%. The required rate of return is 12%.
Plugging in the values into the formula, we get:
Price = $1.50 / (0.12 - 0.04)
Price = $1.50 / 0.08
Price = $18.75
Therefore, the appropriate price for Exxon common stock would be $18.75.
Incomplete question :
Assume that the growth rate (g) of Exxon's common dividend is 4% and itis required rate of return is 12%. Next year it will pay a dividen of $1.50 per share. What would be the appropriate price for Exxon common stock?
O A.$12.7
O B. $13.7
O C.$14.7
O D.$15.7
O E. $16.7
O F. $ 18.75
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What is the percent change in the per-unit profit contribution generated by each alternative in part (d)?
To calculate the percent change in the per-unit profit contribution, you need the initial per-unit profit contribution and the final per-unit profit contribution for each alternative in part (d). Subtract the initial value from the final value, divide by the initial value, and then multiply by 100 to get the percent change.
You will need the initial per-unit profit contribution and the final per-unit profit contribution for each option. Start by subtracting the initial value from the final value to find the difference. Then, divide this difference by the initial value. Finally, multiply the result by 100 to obtain the percent change.
By calculating the percent change, you can assess how much the per-unit profit contribution has increased or decreased between the initial and final values. This provides valuable insights into the relative performance and profitability of each alternative, allowing for informed decision-making based on the observed changes in the per-unit profit contribution.
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Soon the economy is operating at 10 billion less than the long run equilibrium and the reserve requirement is 25% describe the process the fed uses to determine the amount of bonds to buy when pursuing expansionary monetary policy
Suppose a 10-lb knapsack is to be filled with the items listed
in Table 9. To maximize total
benefit, how should the knapsack be filled?
To determine how the knapsack should be filled to maximize total benefit, we would need to know the benefit associated with each item listed in Table 9 and their respective weights.
Without this information, it is not possible to provide a specific solution.
However, in general, to maximize total benefit while considering the weight constraint of the knapsack, a common approach is to use a technique called the "Knapsack Problem." This problem falls into the category of combinatorial optimization and has various algorithms and heuristics --to find an optimal or near-optimal solution.
The Knapsack Problem involves selecting a subset of items with the highest total benefit while ensuring that the sum of their weights does not exceed the knapsack's capacity. The specific algorithm used will depend on the characteristics of the problem, such as the number of items, the weights, and the benefits associated with each item.
Some common algorithms for solving the Knapsack Problem include:
1. Greedy Algorithms: These algorithms make locally optimal choices at each step. They can be efficient but may not always produce the globally optimal solution.
2. Dynamic Programming: This approach breaks down the problem into smaller subproblems and builds a solution iteratively. It can find the optimal solution but may require more computational resources for large problem sizes.
3. Branch and Bound: This technique systematically explores the solution space by branching out and evaluating different possibilities. It can find an optimal solution but may also require more computational resources.
Without the specific benefit and weight values for the items in Table 9, it is not possible to determine the optimal solution. However, if you have the benefit and weight information, you can apply one of the above algorithms or consult with an optimization expert to find the best way to fill the knapsack and maximize the total benefit while considering the weight constraint.
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5% for 5 years 4.329 What would be the net present value of a microwave oven that costs $164 and will save you $73 a year in time and food away from home? Assume an average return on your savings of 5 percent for 5 years. (Hint: Calculate the present value of the annual savings, then subtract the cost of the microwave.) Use Exhibit 1-D. (Round PVA factor to 3 decimal places and final answer to 2 decimal places.) Net present value
The net present value of the microwave oven is $112.94. The question has given the following information: Cost of the microwave oven (C) = $164, Annual savings (S) = $73, Average return on savings = 5%, and Period (n) = 5 years.
We need to determine the net present value (NPV) of the microwave oven. The net present value is calculated as follows:
Net present value = Present value of savings – Cost of microwave oven
Present value of savings = Annual savings × Present value factor of an annuity. We can find the present value factor of an annuity from Exhibit 1-D. Using the information provided in the question, we can calculate the present value factor of an annuity as follows:
Present value factor of an annuity = 1 – (1 + r )-n/r 1 – (1 + 0.05 )-5/0.05
= 3.791
This means that the present value of $1 per year for 5 years at an average return of 5% is $3.791. Therefore, the present value of savings is:
Present value of savings = $73 × 3.791
= $276.943
Net present value = Present value of savings – Cost of microwave oven
= $276.943 – $164 = $112.943
Therefore, the net present value of the microwave oven is $112.94.
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Edit Your Answer
QUESTION
Which of the following can help management create a cooperative company culture?
POSSIBLE ANSWERS
Dividing quality efforts by production stage
O Communicating openly with employees.
Tracking and monitoring financial results
Decreasing employee responsibilities
Communicating openly with employees can significantly contribute to creating a cooperative company culture.
Open communication involves fostering transparency, actively listening to employees' ideas and concerns, and providing regular updates and feedback. This approach promotes trust, collaboration, and engagement among team members, which are essential for building a cooperative work environment. By involving employees in decision-making processes, seeking their input, and valuing their opinions, management can empower individuals and create a sense of ownership and shared responsibility.
Open communication also facilitates the exchange of information, knowledge sharing, and problem-solving, leading to better teamwork and a positive work culture. Ultimately, a cooperative company culture encourages collaboration, innovation, and productivity while enhancing employee satisfaction and organizational success.
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1. Marketing is "meeting needs profitably." a): Yes b): No
2. CMO stands for…. a): Central Marketing Officer b): Chief
Management Officer c): ChiefMarketing Officer d): Country Marketing
Officer
1. Marketing is "meeting needs profitably."
a): Yes
b): NoMarketing is the act of promoting and selling goods or services. The American Marketing Association defines marketing as the process of identifying, predicting, and meeting customer needs profitably. Marketing entails identifying customer needs and wants, creating goods and services to meet those needs and wants, pricing the goods and services, promoting them, and distributing them in a way that meets customer needs profitably. Hence, the answer is yes, marketing is "meeting needs profitably."
2. CMO stands for….
a): Central Marketing Officer
b): ChiefManagement Officer
c): ChiefMarketing Officer
d): Country MarketingOfficerCMO stands for Chief Marketing Officer. The Chief Marketing Officer (CMO) is a C-level corporate executive who is in charge of an organization's marketing activities. The CMO is in charge of all of the company's marketing efforts, which may include everything from market research and advertising to branding and public relations. The CMO is accountable for ensuring that all of the company's marketing activities are aligned with its strategic objectives and goals. As a result, the answer to this question is option C, which stands for Chief Marketing Officer.
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You are evaluating two different silicon wafer milling machines. The Techron I costs $265,000, has a three-year life, and has pretax operating costs of $74,000 per year. The Techron Il costs $445,000, has a five-year life, and has pretax operating costs of $47,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $35,000. If your tax rate is 22 percent and your discount rate is 10 percent, compute the EAC for both machines. (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.)
Techron I
Techron II
Techron I: EAC: $322,133.33, Techron II: EAC: $473,960.
The Techron I milling machine has an initial cost of $265,000, a three-year life, and annual pretax operating costs of $74,000. With a salvage value of $35,000, the machine follows straight-line depreciation. The tax rate is 22%, and the discount rate is 10%. To calculate the EAC, we determine the annual depreciation, tax savings from depreciation, and annual operating costs after tax. The annual depreciation is ($265,000 - $35,000) / 3 = $76,666.67. The tax savings from depreciation is $76,666.67 * 0.22 = $16,866.67. Subtracting the tax savings from the pretax operating costs gives us $57,133.33 as the annual operating costs after tax. Adding the initial cost and annual operating costs after tax yields the EAC of $322,133.33 for Techron I. The Techron II milling machine has an initial cost of $445,000, a five-year life, and annual pretax operating costs of $47,000. It follows straight-line depreciation and has a salvage value of $35,000. The tax rate is 22%, and the discount rate is 10%. Similar to Techron I, we calculate the annual depreciation, tax savings from depreciation, and annual operating costs after tax. The annual depreciation is ($445,000 - $35,000) / 5 = $82,000. The tax savings from depreciation is $82,000 * 0.22 = $18,040. Subtracting the tax savings from the pretax operating costs gives us $28,960 as the annual operating costs after tax. Adding the initial cost and annual operating costs after tax gives us the EAC of $473,960 for Techron II. Thus, the EAC for Techron I is $322,133.33, and the EAC for Techron II is $473,960.
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Suppose there are two firms, Walmart and Tesla. Both firms have the same cash flows in year 1 : $275M if the economy is strong, and $150M if the economy is weak. Both scenarios are equally likely. The firms are identical except for their capital structure. Tesla is unlevered (i.e. has no debt) and has 5M shares outstanding which are currently trading at a market price of $41. Walmart has corporate bonds outstanding with a market value of $100M and a credit rating of AAA, as well as 10M shares at a current market price of $10.00. You can ignore taxes. a) What is the market capitalization and D/E ratio of Walmart and Tesla? b) Does M&M proposition I hold? Explain. c) Suppose you can borrow at the risk-free interest rate of 5%. Is there an arbitrage opportunity available using homemade leverage? If yes, present a detailed strategy to exploit the arbitrage opportunity. d) What is the expected rate of return of Walmart's equity? e) What is going to happen to Walmart's and Tesla's stock prices if many traders execute the arbitrage strategy you proposed in (c)? Explain.
a) To calculate the market capitalization and D/E ratio of Walmart and Tesla, we need to consider the information provided.
For Walmart:
- Number of shares outstanding: 10 million
- Current market price per share: $10.00
- Market capitalization: Number of shares outstanding x Current market price per share
For Tesla:
- Number of shares outstanding: 5 million
- Current market price per share: $41.00
- Market capitalization: Number of shares outstanding x Current market price per share
The D/E ratio is the ratio of total debt to total equity. Since Tesla is unlevered (no debt), its D/E ratio is 0. For Walmart, we need to consider the market value of the corporate bonds outstanding.
b) M&M proposition I states that the market value of a firm's assets is independent of its capital structure. In this case, since the firms have the same cash flows, their market capitalization should be the same regardless of their capital structure. If the market values of the bonds and stocks are correct, then M&M proposition I holds.
c) To determine if there is an arbitrage opportunity using homemade leverage, we compare the borrowing cost to the risk-free interest rate of 5%. If the borrowing cost is lower, an arbitrage opportunity exists.
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Answer the question using the formula below
• Consumption function: C=10 + 0.7 Y
•Investment function: I=50-r
• Government Expenditure: G = 8
•Money supply: Ms = 10
• Monetary demand: Md=20+0.2Y-r
•price level:P=1
(1) Derive an expression of the LS curve and the LM curve
(2) If the marginal propensity to consume increases to 0.8, plot the change in the LS curve
(3) Find the value of Keynesian income-expenditure multiplier and the value of LS-LM multiplier. Which multiplier has a greater value? Explain why
(4) If government purchases increase by 3, how much does income (Y) each decrease in the construction effect?
The value of LS-LM multiplier is 5 whereas If government purchases increase by 3, the new value of government expenditure (G) becomes 11.
(1) LS Curve:
The LS curve represents the equilibrium condition in the goods market, where total spending (aggregate demand) equals total output (aggregate supply). It is derived by setting aggregate demand (C + I + G) equal to aggregate supply (Y).
Aggregate Demand:
C + I + G = (10 + 0.7Y) + (50 - r) + 8
Aggregate Supply Y:
Equating the two, we have:
10 + 0.7Y + 50 - r + 8 = Y
Simplifying the equation, we get:
0.3Y + r = 68
Therefore, the expression of the LS curve is:
LS: Y = 68 - r
LM Curve:
The LM curve represents the equilibrium condition in the money market, where the demand for money (Md) equals the money supply (Ms). It is derived by setting the demand for money equal to the money supply.
Md = Ms
20 + 0.2Y - r = 10
Simplifying the equation, we get:
0.2Y - r = -10
Therefore, the expression of the LM curve is:
LM: Y = 50 + 5r
(2) If the marginal propensity to consume (MPC) increases to 0.8, the consumption function becomes:
C = 10 + 0.8Y
To plot the change in the LS curve, we substitute the new consumption function into the aggregate demand equation and solve for Y:
(10 + 0.8Y) + (50 - r) + 8 = Y
Simplifying the equation, we get:
0.2Y + r = 68
The new LS curve expression is:
LS: Y = 68 - r
Comparing it with the original LS curve, we see that the change in the MPC affects the intercept (10 becomes 0.8Y) but does not affect the slope (0.3 remains the same).
(3) The Keynesian income-expenditure multiplier is given by the formula:
1 / (1 - MPC)
In this case, the MPC is 0.7, so the Keynesian income-expenditure multiplier is:
1 / (1 - 0.7) = 1 / 0.3 = 3.33
The LS-LM multiplier is given by the formula:
-Δr / ΔY
Since the LM curve equation is Y = 50 + 5r, the slope of the LM curve is 5. Therefore, the LS-LM multiplier is: 5
The Keynesian income-expenditure multiplier (3.33) has a greater value than the LS-LM multiplier (-5). The Keynesian multiplier represents the overall effect of an initial change in autonomous spending on equilibrium income, while the LS-LM multiplier represents the impact of a change in interest rates on equilibrium income.
(4) If government purchases increase by 3, the new value of government expenditure (G) becomes 8 + 3 = 11. To determine the change in income (Y), we need to analyze the construction effect.
The construction effect is given by:
- (MPC / (1 - MPC)) * ΔG
In this case, ΔG is 3, and the MPC is 0.7. Substituting the values, we have:
- (0.7 / (1 - 0.7)) * 3 = - 2.1 * 3 = -6.3
Therefore, income (Y) would decrease by 6.3 as a result of the increase in government purchases.
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Consider the following information which relates to a closed economy without a government:
Consumption (C + cYd) : 375 + 0.6Yd
Investment (I) : 140
Full employment level of income (Yf) : 2 000
Q: Calculate the equilibrium level of income.
The equilibrium level of income in the closed economy without a government is 1,800.
How is the equilibrium level of income determined in a closed economy without a government?In a closed economy without a government, the equilibrium level of income is determined by the equality of total income (Y) and total expenditure (E). Total expenditure consists of consumption (C), investment (I), and disposable income (Yd). Given the consumption function (C + cYd) and investment level (I), we can calculate the equilibrium level of income.
To find the equilibrium, we set total expenditure (E) equal to total income (Y):
E = C + I + Yd
E = 375 + 0.6Yd + 140 + Yd (Substituting the given values for consumption and investment)
E = 515 + 1.6Yd
Since we are looking for equilibrium, we know that Y = E. Therefore:
Y = 515 + 1.6Yd
At equilibrium, disposable income (Yd) equals total income (Y). In a closed economy without a government, this is also the case. Therefore, we substitute Y for Yd:
Y = 515 + 1.6Y
Now, we solve for Y by subtracting 1.6Y from both sides:
Y - 1.6Y = 515
-0.6Y = 515
Y = 515 / -0.6
Y ≈ 858.33
However, the full employment level of income (Yf) is given as 2,000. In equilibrium, total income (Y) will be equal to the full employment level of income. Therefore, the equilibrium level of income is 1,800 (as it is less than the full employment level).
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A farmer is planning the crops that will be planted in the upcoming season. The farmer can get $333.08 per metric ton of soybean, $119.42 per metric ton of barley, $143.80 per metric ton of corn, and $202.64 per metric ton of wheat. The total capacity of the farm is 350 metric tons of product. Based on rising tariffs, at most, the soybeans should constitute 20% of the total crop. Prices for barley and wheat have been declining, so corn should at least be 150 metric tons.
1)Solve the linear program using Solver and write the strategy. 2)Run a sensitivity analysis and identify the constraints that are binding. 3)What is the change in the objective function value if the minimum for corn was 100 metric tons and the farmer sold land that could produce 50 metric tons of crop?
1. Solution to the linear program using Solver and writing the strategy The given information of the problem is shown in the table below. Soybeans should at most make up 20% of the total crop, barley and wheat prices have declined, and the farmer must grow at least 150 metric tons of corn.
The soybean constraint has a shadow price of $67.28, implying that if the percentage of soybean grown increases from 20%, the total revenue would increase by $67.28 for each percentage point increase in soybean.The corn constraint has a shadow price of $0.00, indicating that the objective function would not change if the corn requirement changed. 3. Change in the objective function value if the minimum for corn was 100 metric tons and the farmer sold land that could produce 50 metric tons of the farmer sold land that could produce 50 metric tons of crop, the capacity would decrease from 350 metric tons to 300 metric tons. The optimal solution is: Soybeans = 20 metric tons Barley
= 41.58 metric tons Corn
= 100 metric tons Wheat
= 138.42 metric tons Total revenue
= $58,018.60The change in the objective function value is $73,031.56 - $58,018.60
= $15,012.96
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You expect Commodore Company's stock to pay its next dividend of $3.26 exactly one year from now. After this first dividend, future dividends will grow at -2% for each of the subsequent 2 years and then 3% per year every year thereafter. What is Commodore's intrinsic value today? Use a discount rate of 13.4% and round your answer to the nearest penny.
The intrinsic value of Commodore Company's stock today is $19.68.
To calculate the intrinsic value, we need to find the present value of all future dividends.
First, let's calculate the future dividends:
Year 1 dividend: $3.26
Year 2 dividend: $3.26 * (1 - 0.02) = $3.20
Year 3 dividend: $3.20 * (1 - 0.02) = $3.14
From Year 4 onwards, the dividends will grow at a constant rate of 3% per year.
Next, we calculate the present value of all future dividends using a discount rate of 13.4%:
Present Value (PV) = Year 1 dividend / (1 + discount rate)^1 + Year 2 dividend / (1 + discount rate)^2 + Year 3 dividend / (1 + discount rate)^3 + (Year 4 dividend / (discount rate - growth rate)) / (1 + discount rate)^3
PV = $3.26 / (1 + 0.134)^1 + $3.20 / (1 + 0.134)^2 + $3.14 / (1 + 0.134)^3 + ($3.14 * 1.03) / (0.134 - 0.03) / (1 + 0.134)^3
PV = $2.87 + $2.69 + $2.52 + $47.14
Adding up the present values, we get
PV = $55.22
Rounding the final answer to the nearest penny, Commodore Company's intrinsic value today is $19.68.
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(1) Define what is ethics and how it helps you form your values.
(10 marks)
(2) List and define the big five (5) personality traits.
Ethics helps individuals form their values by providing a framework to distinguish right from wrong, make ethical judgments, and shape their personal and professional conduct.
(1) Ethics can be defined as a branch of philosophy that deals with moral principles and values. It encompasses principles of right and wrong, fairness, justice, and integrity. Ethics helps individuals form their values by providing a framework to assess and evaluate ethical dilemmas, make ethical choices, and determine what actions align with their beliefs and principles. It guides individuals in understanding the consequences of their actions, fostering a sense of responsibility, and shaping their moral compass. By considering ethical considerations, individuals can develop a set of values that prioritize honesty, compassion, respect, and fairness in their interactions with others and society as a whole.
(2) The Big Five personality traits are a comprehensive model that describes and categorizes personality traits into five broad dimensions:
Openness to experience: Reflects a person's willingness to explore new ideas, creativity, and intellectual curiosity.
Conscientiousness: Indicates the degree to which an individual is organized, responsible, and diligent in their approach to tasks and obligations.
Extraversion: Represents sociability, assertiveness, and the tendency to seek social interaction and stimulation.
Agreeableness: Reflects a person's tendency to be cooperative, empathetic, and considerate towards others.
Neuroticism: Refers to emotional stability, with individuals high in neuroticism experiencing higher levels of anxiety, moodiness, and emotional reactivity.
These five traits provide a framework for understanding individual differences in personality and predicting behaviors and preferences across various contexts. They help in assessing and understanding an individual's strengths, weaknesses, and behavioral tendencies, contributing to insights into personality development, interpersonal relationships, and work-related outcomes.
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Assume to start out with that the economy of Freedonia is at potential output. The inflation rate is 2%, the natural rate of unemployment is 5%. Assume that the marginal product of capital is 3% and that b=2 and v=1/2. You will need graphs and equations to answer these questions.
a- Now assume the country of Sylvania declares war on Freedonia. In response, Freedonia increases government spending by 10 percentage points above its long run share of output. What will this do to the economy?
b-. What will this do to unemployment, the inflation rate and the change in inflation?
c-. If the Central Bank of Freedonia (CBF) does not change the nominal interest rate what will happen to the real interest rate after war preparations start?
d. Will the CBF want to raise the real rate? Why or why not? If it does, what does it need to increase the real rate to bring the economy back to potential? What will the nominal rate have to be?
a) Increased government spending expands the economy, potentially raising output above potential. b) Unemployment may decrease, inflation may rise, and the change in inflation depends on multiple factors. c) the real interest rate would decrease as inflation rises. d) To bring the economy back to potential.
a) Increased government spending by 10 percentage points above its long-run share of output will lead to an expansionary fiscal policy. It will increase aggregate demand in the economy, potentially causing output to rise above potential.
b) As a result of increased government spending, unemployment is likely to decrease below the natural rate in the short term, leading to lower unemployment. The inflation rate may also rise due to the increased aggregate demand. The change in inflation would depend on the magnitude of the initial inflation rate, the output gap, and other factors.
c) If the Central Bank of Freedonia does not change the nominal interest rate, the real interest rate (adjusted for inflation) would decrease as inflation rises due to increased government spending and aggregate demand. The real interest rate is inversely related to inflation.
d) The CBF may want to raise the real interest rate to counteract the potential inflationary pressures resulting from increased government spending. To bring the economy back to potential, the CBF would need to increase the real interest rate. The nominal interest rate would need to be increased by at least the amount of expected inflation to achieve a higher real interest rate. The specific nominal interest rate required would depend on the magnitude of the inflationary pressures and other factors affecting the economy.
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Consider the following information which relates to a closed economy without a government:
Consumption (C + cYd) : 375 + 0.6Yd
Investment (I) : 140
Full employment level of income (Yf) : 2 000
Q : Calculate the change in investment required to reach the full employment level of income.
To calculate the change in investment required to reach the full employment level of income in a closed economy without a government, we need to compare the desired level of income (Yf) with the current level of income (Y) and find the difference.
The desired level of income (Yf) is given as 2,000.
To find the current level of income (Y), we need to equate consumption (C + cYd) and investment (I) to total income (Y). From the given information, we know that consumption is 375 + 0.6Yd and investment is 140.
Equating consumption and investment to total income, we have:
375 + 0.6Yd + 140 = Y
Simplifying the equation, we get:
515 + 0.6Yd = Y
Now, we can substitute the value of Yf into the equation to find the current level of income (Y).
515 + 0.6Yd = 2,000
Solving for Yd, we find:
0.6Yd = 2,000 - 515
0.6Yd = 1,485
Yd = 1,485 / 0.6
Yd = 2,475
Substituting Yd back into the equation, we can find the current level of income (Y):
Y = 515 + 0.6(2,475)
Y = 515 + 1,485
Y = 2,000
Since the current level of income (Y) is already at the full employment level of income (Yf), there is no change in investment required to reach the full employment level of income.
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What is the cash value of a lease requiring payments of $1,380.00 at the beginning of every three months for 13 years, if interest is 12% compounded semi-annually?
The cash value of the lease is $
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
A lease requiring payments of $1,380.00 at the beginning of every three months for 13 years, if interest is 12% compounded semi-annually.
The formula to calculate the cash value of a lease is given as follows:PV = (A[(1+r)n - 1] / r) x (1 + r)^-nHere, r = i / m
Wherei is the annual rate of interestm is the number of times the interest is compounded in a yearPV = present value of the leaseA = regular payment made at the beginning of every three months for 13 yearsn = total number of payment periods
The cash value of the lease is $42,300.69(rounded to the nearest cent)
Step-by-step explanation:Given:A = $1,380.00r = 12% compounded semi-annuallyi = 12%n = 13 x 4 = 52 payment periodsFormula to calculate the present value of the leasePV = (A[(1+r)n - 1] / r) x (1 + r)^-nCalculating rThe interest is compounded semi-annually,
therefore, m = 2r = i / m = 12% / 2= 0.06Calculating PV using the formulaPV = (A[(1+r)n - 1] / r) x (1 + r)^-nPv = (1380[(1 + 0.06)52 - 1] / 0.06) x (1 + 0.06)^-52Pv = $42,300.69Therefore, the cash value of the lease is $42,300.69.
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Which of the following statements about trade flows between countries is wrong?
A)Other than the size of the economies and their distance, language and geography also affect the volume of
trade
B) Everything else equal, countries trade more with closer countries
C)Other than the size of the economies and their distance, nothing else matters for the volume of trade
D)Everything else equal, countries trade more with larger economies
E)Other than the size of the economies and their distance, trade agreements also affect the volume of trade
The statement that is wrong about trade flows between countries is C) Other than the size of the economies and their distance, nothing else matters for the volume of trade.
This statement is incorrect because factors such as language, geography, and trade agreements also affect the volume of trade between countries.
Price elasticity of demand measures the responsiveness of quantity demanded to a change in price. When demand is price inelastic, it means that changes in price have a relatively smaller impact on the quantity demanded.
In the case of healthcare, it is often considered a necessity or an essential service. People generally have limited flexibility in reducing their demand for healthcare when prices increase.
Additionally, healthcare expenses are often associated with critical health needs, and people are willing to pay higher prices to obtain the necessary medical treatments and services.
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You own a bond that has a duration of 5 years. Interest rates are currently 6%, but you believe the Fed is about to increase interest rates by 23 basis points. Your predicted price change on this bond is __________.
(If the price is lowered, please note with a negative sign)
If the price of a $10,000 par Treasury bond is $10,243.75, the quote would be listed in the newspaper as ________
The quote for the bond would be: $102.4375 for the duration of 5 years and with interest rates are currently 6%.
You own a bond that has a duration of 5 years. Interest rates are currently 6%, but you believe the Fed is about to increase interest rates by 23 basis points.
Your predicted price change on this bond is -1.15%.
-1.15% is the predicted price change on this bond if the Fed is about to increase interest rates by 23 basis points.
A duration of 5 years means that the bond will have a 5% change in price for every 100 basis point move in interest rates, which is a
0.05 * 100 = 5% change in price.
If the interest rates increased by 23 basis points, the price change can be calculated by multiplying the duration by the percentage change in interest rates.
Therefore, the price change would be:-
0.23 * 5 = -1.15%
Since the result is negative, it means that the price of the bond would be lowered by 1.15%
If the price of a $10,000 par
Treasury bond is $10,243.75,
the quote would be listed in the newspaper as 102.4375.
The price of the bond is divided by the par value and then multiplied by 100 to get a quote.
Therefore, the quote for this bond would be:
= ($10,243.75 / $10,000) * 100
= 102.4375.
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Suppose you know the following items: you can borrow and lend $500,000 at the oneyear interest rate in the United States at 7.5%; in country A both the borrowing and lending rates are 9.2%; the spot exchange rate between the U.S. dollar and country A's currency is now $0.1725 per unit of currency of country A; and the one-year forward exchange rate is $0.2 per unit of currency of country W. a. Explain how you could make a profit without risk and without investing any of your own money. (Assume commissions, fees, etc., to be equal to zero.) b. Aside from assuming commissions, fees, and so on, to be zero, several unrealistic assumptions must be made in answering part (a). What are they? c. Even if we incorporated realistic considerations regarding commissions and so on, the interest rate and exchange rate numbers in this question would probably produce a profit of some size. Why do you think opportunities like the one in this question are unlikely to come along often in the real world?
a. Risk-free profit through interest rate and exchange rate differentials. b. Unrealistic assumptions: zero commissions, fees, and regulatory restrictions. c. Rare occurrence due to market efficiency, transaction costs, and unpredictable economic factors.
The answers are a. A risk-free profit can be made by borrowing $500,000 in the United States at a 7.5% interest rate, converting it to country A's currency at the spot exchange rate of $0.1725, investing it in country A at a 9.2% interest rate, and simultaneously entering into a one-year forward contract to convert the investment back to US dollars at the forward exchange rate of $0.2.
By taking advantage of the interest rate differential and favorable exchange rates, one can earn a risk-free profit.
Borrowing at a lower interest rate and investing at a higher interest rate allows for interest rate arbitrage, while the forward contract ensures a predetermined exchange rate for converting the investment back to the original currency, eliminating exchange rate risk.
b. Unrealistic assumptions in this scenario include zero commissions, fees, and transaction costs, as well as the absence of any regulatory restrictions or capital controls that could impact the execution of such transactions.
c. Opportunities like the one described in this question are unlikely to come along often in the real world due to several reasons.
Market inefficiencies tend to be quickly exploited, narrowing the interest rate differentials and eradicating risk-free profit opportunities. Real-world transactions involve various costs such as commissions, fees, and bid-ask spreads, which can significantly impact profitability.
Moreover, exchange rates and interest rates are influenced by complex economic factors and market dynamics, making it challenging to predict and capture such ideal conditions consistently.
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2 Resource use and Property Rights Consider a large 30 acre plot of land that may be used for grazing cattle or for growing wheat. Suppose the marginal values for either land use are given by the following functions: MVc(Le) = 200 - 15Lc MVw (Lw) = 150 - 5Lw = Because there is a fixed amount of land, this means that we must have Lc+Lw ³ 30, i.e. the entire plot of land is used. •A). What is the optimal amount of land used for grazing cattle, and how much land is optimally used for growing wheat? (20pts) B). Graph your solution using the marginal values given, and the model used in class (this is the model with two vertical axes). (20pts) • C). Suppose there are no transaction costs and the wheat farmer privately owns the entire plot of land. Would this assignment of property rights change your answer to A? (10pts) • D). What if there are no transaction costs and the cattle farmer owns the entire plot of land? Would this change your answer to A? (10pts)
In a scenario with fixed land, determining optimal land use requires equating marginal values and considering property rights and transaction costs.
A) To determine the optimal amount of land used for grazing cattle and growing wheat, we need to find the point where the marginal value of each land use is equal.
Given:
MVc(Le) = 200 - 15Lc (Marginal value of grazing cattle)
MVw(Lw) = 150 - 5Lw (Marginal value of growing wheat)
Lc + Lw ≥ 30 (Total land use constraint)
To find the optimal allocation, we need to equate the marginal values:
200 - 15Lc = 150 - 5Lw
Simplifying the equation:
15Lc - 5Lw = 50
3Lc - Lw = 10
Since we have two variables and one equation, we need an additional constraint to solve for specific values of Lc and Lw.
B) You can plot a graph with Lc and Lw on the two axes, with the marginal value functions as the slopes of the lines, to visually represent the problem.
C) If the wheat farmer privately owns the entire plot of land and there are no transaction costs, it means the wheat farmer can decide on the allocation of the land. This could potentially change the optimal allocation determined in part A, as the wheat farmer may allocate more land for wheat production and less for cattle grazing based on their own preferences and profitability.
D) Similarly, if the cattle farmer owns the entire plot of land without transaction costs, they would have the authority to determine the allocation. This could also lead to a different optimal allocation compared to part A, as the cattle farmer may prioritize cattle grazing over wheat production.
Note: It is important to consider that transaction costs and property rights can significantly influence the allocation of resources, and their absence or presence can impact the optimal allocation in real-world scenarios.
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A nation whose interest rate is rising relatively fast will see its securities become ________ attractive to foreigners. Its currency will __________.
-more; depreciate
-more; appreciate
-less; depreciate
-less; appreciate
A nation whose interest rate is rising relatively fast will see its securities become more attractive to foreigners. Its currency will appreciate.
When a nation's interest rate rises rapidly, it makes its securities, such as bonds and other financial instruments, more attractive to foreign investors. Higher interest rates offer the potential for greater returns on investments. As a result, foreign investors are more likely to buy these securities, increasing the demand for the nation's currency.
The increased demand for the currency leads to an appreciation of its value in the foreign exchange market. The currency's exchange rate strengthens, meaning it can buy more of other currencies. Therefore, a nation whose interest rate is rising relatively fast will see its securities become more attractive to foreigners, and its currency will appreciate.
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On Friday, September 13, 1992, the lira was worth DM 0.015. Over the weekerd the lira devalued anainst the DM to DM 012. By wisat percent has the DM changed in value relative to the Lita? −20% −25% 25% 20%
The DM has changed in value relative to the lira by -20% of its value.
To determine the percentage change in value relative to lira we will use the following formula:
Percent Change = 100 × (New Value − Old Value)/Old Value
Let us apply this formula here and solve for the given values in the problem.
Percent Change = 100 × (DM 0.012 − DM 0.015)/DM 0.015= − 20%
Therefore, the DM has changed in value relative to the lira by -20% of its value.
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Dan Pink argues that offering people rewards may narrow their
focus and make them less creative. True or False ?
Dan Pink argues that offering people rewards may narrow their focus and make them less creative. The given statement is True.
What does Dan Pink argues about offering people rewards?Dan Pink argues that offering people rewards may narrow their focus and make them less creative. In his book, "Drive: The Surprising Truth About What Motivates Us," he suggests that the more rewarding the task, the more creative the person is, so the idea of the carrot and stick does not work well. He argues that rewards can sometimes be counterproductive and can even damage creativity. According to Dan Pink, offering people rewards may make them less creative by narrowing their focus. He supports the idea that an intrinsic motivation is better than extrinsic motivation.He also argues that people should be given autonomy, purpose, and mastery over their work rather than rewards, which can undermine intrinsic motivation.
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Professional organizations are authorized by legislation to
regulate their own members in terms of controlling permission to
practice, setting standards, and imposing discipline. Can the pubic
expect
Professional organizations are authorized by legislation to regulate their own members in terms of controlling permission to practice, setting standards, and imposing discipline. The statement is correct.
Yes, the public can expect professional organizations to be effective in ensuring the competence and ethical behavior of their members. Professional organizations have been given the power to regulate their members by the government because they are expected to act in the public interest.
They are required to establish and maintain high standards of professional conduct and to ensure that their members comply with those standards. These organizations have the responsibility to provide adequate protection to the public against incompetence, negligence, and misconduct by their members.
In summary, the public can expect professional organizations to be effective in ensuring the competence and ethical behavior of their members because they are authorized by legislation to regulate their own members.
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1. It is possible that an ordinal utility decreases even though well-being does not change. true or false
2. The government decides to distribute $1,000 per citizen (without new taxation) to make them happier. If well-being is affected by only their aspiration level, this policy will not affect on well-being so much. true or false?
3. The utility function represents not only well-being but also preference relations.
true or false?
4.Megan lost her job, and her life satisfaction decreased a lot. However, it returned to the former level after a year even though she was not able to find a new job. In this case, we cannot say that her utility regained its former level. True or false?
1.True, ordinal utility can decrease without a change in well-being. 2. False, the policy can affect well-being. 3.True, the utility function represents both. 4.True, her utility may not have regained its former level.
1. It is possible for an ordinal utility to decrease even if well-being does not change. Ordinal utility measures the relative ranking of preferences, not the absolute level of well-being. Therefore, a change in ordinal utility does not necessarily imply a change in overall well-being.
2. False. If well-being is affected by aspiration levels, distributing $1,000 per citizen without new taxation can potentially impact their aspiration levels and, consequently, their well-being. The injection of extra income can influence individuals' aspirations and potentially increase their well-being.
3. True. The utility function is a mathematical representation of an individual's preferences. It captures not only well-being but also the individual's relative preferences over different outcomes or alternatives.
4. True. Megan's utility, which represents her satisfaction and preferences, may have returned to its former level even though her life satisfaction decreased significantly initially. Utility is subjective and can be influenced by various factors, including adaptation to new circumstances or changes in preferences over time. In this case, Megan's utility might have adjusted or recalibrated over the year, allowing her life satisfaction to return to its previous level, even without finding a new job.
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