3 factors may be considered as to why income statements are not a perfect measure:
Non-cash expensesTiming of recognitionOmission of non-operating items1. Non-cash expenses: Income statements include non-cash expenses such as depreciation, amortization, and impairment charges, which represent reductions in the value of assets over time. These expenses do not represent cash outflows and, therefore, can distort the true cash flow of a business.
2. Timing of recognition: Income statements are subject to the timing of revenue recognition. For example, if a company recognizes revenue on a cash basis, the income statement will not reflect revenue that has been earned but not received. This may lead to inaccurate financial statements.
3. Omission of non-operating items: Income statements do not include non-operating items such as gains or losses on the sale of assets or investments. These items can have a significant impact on a company's financial position and may be omitted from the income statement, leading to incomplete financial statements.
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How to economists conceptualise Human Capital? Why are these
differences important both empirically and theoretically?
(500w)
Please don't copy from investopedia!
Human capital is an essential component of economic development and productivity growth, according to economists.
It pertains to the knowledge, skills, and abilities that people possess, which they use to create economic value. When human capital is used in a manner that is both productive and effective, it may lead to increased economic productivity, which is regarded as the main driver of long-term economic growth. Human capital is an important term in economics, and economists conceptualize it in a variety of ways. The reason for the differences between these models is both theoretically and empirically significant.The most common ways economists conceptualize human capital are as follows:Education and Training: Human capital is a term that refers to the skills, knowledge, and abilities that people acquire through education and training.
Education is regarded as a human capital investment because it improves individuals' skills and knowledge, which they use to generate income over time. It enables people to comprehend and participate in economic activities better, resulting in increased productivity. Economists define human capital as the cumulative effects of learning, on-the-job training, and formal education.Health: Human capital is a concept that is linked to health. Healthy people are more productive and can engage in economic activity more actively than sick people.
People who are in good health have a better chance of obtaining employment, working more hours, and being more productive than those who are unwell. According to the World Health Organization, human capital includes physical, mental, and social well-being. Nutrition, exercise, and access to health care are all important contributors to human capital.Social Capital: According to some economists, social capital is another component of human capital. Social capital refers to the networks, relationships, and social norms that exist in a society. Social capital may be used to increase economic productivity in a variety of ways.
It may assist in the formation of new businesses and the development of informal markets and can increase trust and cooperation among economic actors. The existence of strong social bonds within a community can lead to increased economic activity.In conclusion, economists conceptualize human capital in different ways because it can be difficult to define and quantify. The various methods used to conceptualize human capital are theoretically and empirically significant.
They illustrate how various human traits and characteristics can be utilized to improve economic outcomes. The use of human capital as an economic development and productivity growth tool has been validated empirically, and its importance in economic growth is well-known.
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You shall work with the accounts department in order to gain some learning experience with regard to costing, you are required to do a. Method of cost allocation and apportionment b. Cost volume and profit analysis c. Pricing of hospitals services d. Budget preparation Guideline 1. Prepare the list of data required to complete the exercise-design template. 2. Confirm the data with department heads. 3. Carry out the analysis as per discussion in the class/other learning from a different source
You can then use this information to further explore and complete the exercises with the guidance of your instructor or relevant resources.
a) Method of cost allocation and apportionment:
List of data required: Total costs, cost drivers, cost centers, allocation bases, activity levels, and any specific cost allocation rules or methods.
Confirm with department heads: Discuss the cost centers and activities within each department, as well as the cost drivers that best represent the consumption of resources.
Analysis: Apply the chosen cost allocation method (e.g., direct method, step-down method, reciprocal method) to allocate or apportion costs to cost centers or activities based on their usage or benefit.
b) Cost volume and profit analysis:
List of data required: Sales revenue, variable costs, fixed costs, selling price per unit, contribution margin per unit, and relevant range of activity (e.g., units sold, sales volume).
Confirm with department heads: Obtain actual or projected sales volume, variable costs per unit, fixed costs, and selling prices.
Analysis: Calculate the contribution margin, contribution margin ratio, breakeven point, target profit, and perform sensitivity analysis to evaluate the impact of changes in volume, costs, or prices on profitability.
c) Pricing of hospital services:
List of data required: Direct costs (e.g., medical supplies, staff salaries), indirect costs (e.g., administrative expenses, facility costs), patient volume or activity levels, payer mix (proportion of different types of patients and their payment rates), reimbursement rates, and pricing objectives.
Confirm with department heads: Gather specific cost information, patient volume data, and reimbursement rates for different services or procedures.
Analysis: Calculate the cost per unit or service, consider pricing objectives (e.g., cost recovery, profit margin), and evaluate the impact of different payer mixes or reimbursement rates on pricing decisions.
d) Budget preparation:
List of data required: Historical financial data, projected sales or revenue, expected costs (fixed and variable), capital expenditure plans, and any other relevant information for budgeting.
Confirm with department heads: Obtain sales projections, cost estimates, and planned investments or expenditures.
Analysis: Develop a budget framework, allocate resources based on organizational goals, consider financial constraints, review historical data, and create a budget plan that aligns with the organization's objectives.
Remember to consult your instructor or relevant resources for specific guidelines and instructions on how to complete the exercises effectively.
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Qualifying taxpayers whose Child Tax Credit was limited by their tax liabilities may qualify for:
An additional exemption.
The Additional Child Tax Credit.
An additional itemized deduction.
An additional nonrefundable credit.
Qualifying taxpayers whose Child Tax Credit (CTC) was limited by their tax liabilities may qualify for The Additional Child Tax Credit. The Additional Child Tax Credit (ACTC) is a refundable tax credit that can be claimed in addition to the regular CTC.
The ACTC is available to taxpayers with qualifying children who have a tax liability that is less than the full amount of the CTC. The amount of the ACTC is equal to the difference between the full amount of the CTC and the taxpayer's tax liability. The ACTC is not available to taxpayers who file a tax return using the standard deduction. Taxpayers who are eligible for the ACTC must file Form 8812, Additional Child Tax Credit.
Here are some of the requirements for the ACTC:
You must have a qualifying child.
Your modified adjusted gross income (AGI) must be less than $400,000 if you file a joint return, $200,000 if you file as a head of household, or $125,000 if you file as single or married filing separately.
You must not be a dependent on someone else's tax return.
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Do group members have an
ethical responsibility to report shirkers to
leadership?
The question of whether group members have an ethical responsibility to report shirkers to leadership is subjective and depends on various factors, including the context, the nature of the work, and the group dynamics. Here is a perspectives to consider:
Duty to the Organization: Some argue that group members have a responsibility to uphold the best interests of the organization. If a team member consistently fails to fulfill their responsibilities and their actions are negatively impacting the team's performance or hindering the organization's goals, reporting such behavior may be seen as necessary to maintain the overall productivity and integrity of the group.
Ultimately, the ethical responsibility of reporting shirkers to leadership is a complex issue that requires careful consideration of the specific circumstances and potential consequences. It may be beneficial for organizations to establish clear guidelines and channels for addressing performance issues and encourage open communication among team members to resolve such matters in a fair and constructive manner.
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Select all of the outcomes below which are Pareto inferior. (Hint: there are more than one.) Ray Drink More Water Who (12,7) (6,11) (7,12) Mary Is (9,2) (4,9) (5,8) It (5,3) (15,2) (3,4) 1.(12,7) □2 (6,11) 03 (7,12) 4.(9,2) 5.(4,9) 06. (5,8) 07.(5,3) 8. (15,2) 9.(3,4)
Pareto inferior outcomes can be identified as outcomes in which at least one person is worse off, and nobody is worse off. Below are the selected Pareto inferior outcomes from the given set of data:(12,7)(6,11)(9,2)(4,9)(5,3)(3,4) Let's analyze each of these Pareto inferior outcomes in detail:
(12,7)In this outcome, Ray will benefit, while Mary will be worse off. Therefore, it's a Pareto inferior outcome.2. (6,11)In this outcome, Mary will benefit, while Ray will be worse off. Therefore, it's a Pareto inferior outcome.3. (9,2)In this outcome, Mary will benefit, while Ray will be worse off. Therefore, it's a Pareto inferior outcome.
(4,9)In this outcome, Ray will benefit, while Mary will be worse off. Therefore, it's a Pareto inferior outcome.5. (5,3)In this outcome, Ray will benefit, while Mary will be worse off. Therefore, it's a Pareto inferior outcome.6. (3,4)In this outcome, Mary will benefit, while Ray will be worse off. Therefore, it's a Pareto inferior outcome.Therefore, the selected Pareto inferior outcomes are (12,7), (6,11), (9,2), (4,9), (5,3), and (3,4).
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Managerial accounting is primarily concerned with managers and external users. T F 2. Reports prepared in financial accounting are general-purpose reports, whereas reports prepared in managerial accounting are usually special-purpose reports. T F
False. The given statements of Managerial accounting and Reports prepared in financial accounting are both False (F).
Managerial accounting is primarily concerned with the internal reporting of an organization. It is focused on providing information to the managers of the organization to make decisions, control, plan, and measure performance. The information provided by managerial accounting is not provided to external stakeholders and is not regulated. Its information is used for the internal decision-making process and to run the business.
Therefore, the first given statement is False. Reports prepared in managerial accounting are typically for a specific purpose and contain detailed financial information. Managerial accounting reports are not required by law, and they are not subject to any regulatory requirement. These reports are prepared on a regular basis or whenever a decision is required that requires specific data. Managerial accounting reports are not necessarily standardized and can vary depending on the purpose they serve, such as cost-benefit analysis, breakeven analysis, etc.Therefore, the second given statement is also False.
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A fixed exchange rate is an exchange rate whose value
A) reflects the comparative advantage of the home country versus other foreign countries
B) is established annually by the International Monetary Fund
C) remains fixed at least for a year
D) is set when a country ties the value of its currency to some other widely-used commodity or curret
The option D is correct, A fixed exchange rate is an exchange rate whose value is set when a country ties the value of its currency to some other widely-used commodity or currency.a fixed exchange rate is the official exchange rate set by the government or central bank.
This rate does not fluctuate with changes in supply and demand as it is fixed.There are several advantages and disadvantages to fixed exchange rates.
One advantage is that it can reduce uncertainty in international trade as businesses can forecast exchange rates with more confidence. This can encourage foreign investment in a country. Additionally, a fixed exchange rate can prevent a country from experiencing inflation if it is tightly controlled and managed properly.
However, there are also disadvantages to fixed exchange rates. One disadvantage is that a fixed exchange rate can lead to imbalances in international trade.
Floating exchange rates are determined by supply and demand in the market and can fluctuate in value over time. On the other hand, fixed exchange rates are set by the government or central bank and do not fluctuate with changes in supply and demand.
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Leek Company predicted that the fixed overhead would be $200,000 in April 2018. Production amounted to 60,000 actual and 50,000 budgeted decks of cards. Each deck takes approximately 0.20 machine hours to produce. The actual overhead costs per machine hour are $25. What is the production-volume variance? O a $40,000 unfavourable Ob $40,000 favourable O c. $150,000 unfavourable Od. $150,000 favourable Oe. $0
The production-volume variance is $40,000 unfavorable: The correct answer is, the production-volume variance is $100,000 unfavorable.
Production-volume variance can be defined as the difference between the budgeted fixed overhead for a certain number of units. And the fixed overhead that was actually incurred for the actual number of units that were produced.
This is calculated in monetary terms and is expressed as either favorable or unfavorable. In this case, the following information was given: Budgeted fixed overhead = $200,000 Budgeted production (budgeted number of decks of cards) = 50,000Actual production (actual number of decks of cards) = 60,000. Overhead cost per machine hour = $25Each deck of cards takes 0.20 machine hours to produce.
Therefore, the budgeted fixed overhead per deck of cards can be calculated as Budgeted fixed overhead / Budgeted production= $200,000 / 50,000= $4 per deck of cards.
Next, the total overhead cost for the actual production can be calculated as Actual production x Overhead cost per machine hour x Time taken per deck= 60,000 x $25 x 0.20= $300,000.
Hence, the actual fixed overhead cost per deck of cards produced can be calculated as:$300,000 / 60,000= $5 per deck of cards.
Finally, the production-volume variance can be calculated as follows: Budgeted fixed overhead for actual production - Actual fixed overhead for actual production= (Budgeted fixed overhead per deck of cards x Actual production) - (Actual fixed overhead per deck of cards x Actual production)=(50,000 x $4) - (60,000 x $5)= $200,000 - $300,000= -$100,000Therefore, the production-volume variance is $100,000 unfavorable.
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6. Duval Manufacturing industries, Inc., orally engaged Harris as one of its district sales managers for and 18-month period commencing April 1, 1980. Harris commenced work on that date and performed his duties in a highly competent manner for several months. On October 1,1980, the company gave Harris a notice of termination as of November 1,1980, citing a downturn in the market for its products. Harris sues seeking either specific performance or damages for breach of contract. Duval pleads the Statute of Frauds and/or a justified dismissal due to the economic situation. What is the probable outcome of the lawsuit?
a. Harris will prevail because he has partially performed under the terms of the contract.
b. Harris will lose because his termination was caused by economic lectors beyond Duval’s control.
c. Harris will lose because such a contract must be in writing and signed by a proper agent of Duval.
d. Harris will prevail because the Statute of Frauds does not apply to contracts such as his.
The probable outcome of the lawsuit would be:
c. Harris will lose because such a contract must be in writing and signed by a proper agent of Duval.
The Statute of Frauds is a legal requirement that certain types of contracts, including contracts that cannot be performed within one year, must be in writing to be enforceable. In this case, the contract between Harris and Duval Manufacturing Industries, Inc. is an oral agreement for an 18-month period, which exceeds one year. Therefore, the contract falls within the scope of the Statute of Frauds and should have been in writing.
Since the contract is not in writing, it does not meet the legal requirements, and Harris would likely be unable to enforce it. Even though Harris has partially performed under the terms of the contract, the absence of a written agreement would likely prevent him from prevailing in the lawsuit.
Furthermore, Duval's justification for termination due to economic factors may strengthen their position in the case. If they can demonstrate that the downturn in the market for their products is a valid reason for termination, it could further weaken Harris' claim.
It's important to note that legal outcomes can vary depending on the specific details and circumstances of the case, and this response is based on the information provided in the question.
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Q1.
Your company invested $500,000 five years ago that is now worth $1476732.
What is the annual interest rate that the company earned on compound interest basis.
Note: Provide your answer rounded to one decimal place WITHOUT the $ sign (ex: 23,4).
Q2.
How long does it to take double an investment if the investment pays only simple interest at the rate of 14 % per year?
: The annual interest rate that the company earned on the compound interest basis is 10.2%.Explanation:Given thatThe present value of the investment (PV) = $500,000The future value of the investment (FV) = $1,476,732n = 5 yearsRate of interest (r) = ?We need to find the annual rate of interest earned by the company on the compound interest basis.
So we use the formula for compound interest and solve for the rate of interest.r = [(FV / PV)^(1/n) - 1] * 100Putting the values in the formula, we get,r = [(1,476,732 / 500,000)^(1/5) - 1] * 100r = 10.2%Therefore, the annual interest rate that the company earned on the compound interest basis is 10.2%Q2.Main Answer: It will take 5 years to double an investment if the investment pays only simple interest at the rate of 14% per year.
Explanation:We know that the formula to calculate the amount of simple interest is given by:I = (P * r * t) / 100WhereI = Simple InterestP = PrincipalR = Rate of interestT = TimeThe amount A = P + IFor doubling the investment, the amount will be twice the principal.So, A = 2PA = P + (P * r * t) / 100Putting the values in the formula, we get,2P = P + (P * 14 * t) / 1002P - P = (P * 14 * t) / 100P = (P * 14 * t) / 100t = 100 / 14t = 7.14 yearsTherefore, it will take 7.14 years to double the investment if the investment pays only simple interest at the rate of 14% per year.Rounding off to 1 decimal place, we get,t = 7.1 years (approx)
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One of the assumptions of the constant dividend growth model is:
options:
A Dividends increase by a positive amount each year.
B Dividends either remain constant or increase by a positive amount each year.
C The capital gains yield is a positive value
DThe growth rate in dividends is greater than the discount rate.
EThe discount rate is greater than the growth rate in dividends.
The correct answer is option B: Dividends either remain constant or increase by a positive amount each year.
The constant dividend growth model, also known as the Gordon Growth Model, assumes that dividends will grow at a constant rate indefinitely. This implies that dividends will either remain constant over time or increase by a positive amount each year. The model assumes a stable and predictable dividend growth pattern.
Option A is not correct because the model allows for constant dividends as a possibility.
Option C is not a specific assumption of the constant dividend growth model. The capital gains yield represents the change in the stock price, which is not explicitly considered in this model.
Option D is not correct because the growth rate in dividends does not necessarily have to be greater than the discount rate in the constant dividend growth model.
Option E is not correct because the discount rate, which is used to calculate the present value of future dividends, is typically assumed to be greater than the growth rate in dividends to ensure a positive present value. However, it is not an assumption specific to the constant dividend growth model.
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what vendor selection criteria are described by price and financial stability?
Vendor selection criteria are described by price and financial stability: cost of goods or services and financial status.
Vendor selection criteria that are described by price and financial stability are as follows:
1. Price: The price of the services or goods is the most important factor to consider when choosing a vendor. It's critical to ensure that the vendor provides the best quality products at the most competitive prices. As a result, companies must compare prices and ensure that the vendor offers high-quality goods or services.
2. Financial stability: In order to assure that the vendor will be around to provide goods or services in the future, a firm must examine the financial stability of the vendor. Companies should assess the vendor's financial status, including its ability to repay loans and its credit history.
Financial stability is critical to maintaining the vendor relationship and ensuring that the vendor is able to continue providing goods and services on a long-term basis.
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(i) Maryanne is seeking sufficient life
insurance cover to provide for her children. Currently Maryanne
earns $95,000 p.a. and she has assessed that approximately 80% of
this amount will be needed on
Maryanne would need life insurance cover of $76,000 to provide for her children. To calculate the amount of life insurance cover needed by Maryanne, we can multiply her annual income by the percentage she assessed as necessary for her children's needs.
Life insurance cover needed = Annual income × Percentage needed
Maryanne currently earns $95,000 per year and she assessed that approximately 80% of this amount will be needed for her children, we can calculate:
Life insurance cover needed = $95,000 × 0.80
= $76,000
Therefore, Maryanne would need life insurance cover of 76,000 dollar to provide for her children.
Complete question: (i) Maryanne is seeking sufficient life insurance cover to provide for her children. Currently Maryanne earns $95,000 p.a. and she has assessed that approximately 80% of this amount will be needed on an annual basis to support her children for 25 years. She would also like to provide an initial capital amount of $400,000 at the time of her death to cover funeral costs, clear the mortgage and money for education costs.
Use the multiple approach to calculate Maryanne’s life insurance cover required and assume an earnings rate of 6%.
(a)Calculate the life insurance cover required.
(b) What difference would it make to your calculations in part a) of this question if the earnings rate was increased to 8%? Why would such a difference be expected?
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Suppose that the economy was initially in a long-run equilibrium. Then the Federal Government decided to increase government spending by 1 trillion dollars on infrastructure. A) Use the the IS-LM and AD-AS diagrams to show the short-run effects of this policy change. Clearly label all axes, curves, and equilibrium values of variables for full credits. B) Use the the IS-LM and AD-AS diagrams to show what happens in the transition from the short run equilibrium to the new long run equilibrium. Clearly label all axes, curves, and equilibrium values of variables for full credits. C) How do the new long-run equilibrium values of r, Y, P, and I compare to their initial values?
It's significant to note that the specific outcomes and adjustments in the economy would depend on various assumptions, factors, and policy responses, and may vary in different economic models and contexts.
A) Short-Run Effects:
In the short run, an increase in government spending will affect the economy through the IS-LM and AD-AS framework:
- IS-LM diagram: The IS curve will shift to the right due to increased government spending, indicating higher output (Y). This occurs because increased government spending increases aggregate demand (AD). The LM curve may also shift depending on the monetary policy response, affecting interest rates (r) and output (Y).
- AD-AS diagram: The aggregate demand (AD) curve will shift to the right due to increased government spending. This leads to higher output (Y) and potentially higher prices (P) in the short run. The aggregate supply (AS) curve is typically assumed to be upward sloping in the short run, allowing for price adjustments.
B) Transition to New Long-Run Equilibrium:
In the long run, the economy adjusts to the increase in government spending and reaches a new equilibrium:
- IS-LM diagram: In the long run, the increased government spending may lead to higher interest rates (r) as the demand for loanable funds increases. This, in turn, reduces investment (I) and shifts the IS curve back to its original position. Eventually, the economy returns to the full employment level of output.
-AD-AS diagram: In the long run, the aggregate supply (AS) curve adjusts to reflect potential output, and the economy reaches a new long-run equilibrium. Output (Y) returns to its potential level, and prices (P) may increase to reflect the increase in government spending.
C) New Long-Run Equilibrium Values:
In the long run, the new equilibrium values compared to the initial values would depend on various factors, including the initial state of the economy and the specific dynamics at play. However, some general observations can be made:
- Interest rates (r): In the short run, interest rates may initially increase due to increased demand for loanable funds. In the long run, interest rates may adjust back to their initial levels or stabilize at a new equilibrium depending on monetary policy and other factors.
- Output (Y): In the short run, output increases due to the higher government spending. In the long run, output returns to its potential level, which is determined by factors such as the availability of resources and technology.
- Prices (P): In the short run, prices may increase as aggregate demand exceeds aggregate supply. In the long run, prices may adjust to reflect the increased government spending, but the extent of the adjustment would depend on factors such as inflation expectations and supply-side factors.
- Investment (I): In the short run, investment may decrease due to higher interest rates resulting from increased government spending. In the long run, investment may stabilize at a new equilibrium or adjust based on various factors such as business confidence and productivity.
It's important to note that the specific outcomes and adjustments in the economy would depend on various assumptions, factors, and policy responses, and may vary in different economic models and contexts.
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TOPIC: Crowd Theory
The Leader
According to LeBon but not Arendt was central to the creation of mass movements
According to Arendt but not LeBon was central to the creation of amss movements
According to both LeBon and arendt was central to the creation of mass movements
According to LeBon and Arendt was completly irrelevant to the creation of mass movements
According to LeBon and Arendt, the leader plays a central role in the creation of mass movements, which differs from the view that the leader is completely irrelevant or exclusive to one of the theorists. Option C
LeBon and Arendt, two prominent theorists in crowd theory, share the perspective that the leader plays a central role in the creation of mass movements. They both emphasize the influential power of leadership in mobilizing and guiding the crowd toward a collective goal or action.
LeBon, known for his work in "The Crowd: A Study of the Popular Mind," highlights the leader as a crucial factor in shaping the behavior and actions of a crowd. He argues that the leader possesses a charismatic aura and persuasive abilities that enable them to manipulate the crowd's emotions and direct their collective energy.
Similarly, Arendt, in her analysis of totalitarianism and the nature of power, acknowledges the significance of the leader in the creation of mass movements. She emphasizes the leader's ability to articulate a compelling vision or ideology, which resonates with the masses and motivates their participation in collective actions.
Both theorists recognize that the leader acts as a catalyst, providing guidance, inspiration, and a sense of direction to the crowd. While they may have nuanced differences in their understanding of the leader's role, they share the view that the leader is central to the creation and dynamics of mass movements.
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After all historical claims have been resolved, the Waitangi Tribunal will automatically dissolve in terms of s 7 of the Treaty of Waitangi Act. This statement is:
Select one:
a.False
b.True
c.It was true up to the 1985 Amendment Act
Therefore, the statement that the Waitangi Tribunal will automatically dissolve after all historical claims have been resolved is incorrect. The tribunal continues to function as an ongoing institution under the Treaty of Waitangi Act.
The statement is false. According to Section 7 of the Treaty of Waitangi Act, the Waitangi Tribunal will not automatically dissolve after all historical claims have been resolved. The Act does not provide for the automatic dissolution of the Waitangi Tribunal. The Waitangi Tribunal is a permanent commission of inquiry established to address and investigate claims related to breaches of the Treaty of Waitangi.
The purpose of the Waitangi Tribunal is to facilitate the resolution of historical Treaty claims and provide recommendations for redress. It plays a crucial role in addressing past injustices and promoting the principles of the Treaty. While the tribunal's workload may decrease as historical claims are resolved, its existence and ability to address new claims or matters arising from the Treaty of Waitangi remains unaffected.
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Regarding to the estimation of market power, which of the following statements is NOT true? A. The cost of the company should be higher than what appears in the financial statement if the feed is exported from a US company, instead of using the company's own pasture. B. The Lerner index of Huishan should be lower than the estimation based on the financial statement if the company underreported the feed cost. C. The Lerner index of Huishan should be lower than the estimation based on the financial statement if the company overstated its market share. D. The report of Muddy water also claimed that the raw milk price of the company, RMB4144/ton, is overstated because the industrial average level is between RMB-4005-4040/ton. If this is true, the mark- up of the company should be higher. 2. Regarding to the dishonesty behavior of Huishan Dairy, which of the following statement is TRUE? A. Data fraud stems from the moral hazard of Huishan Dairy due to lack of public monitoring. B. Data fraud stems from the adverse selection of Muddy Waters due to asymmetric information. C. The collective reputation of the dairy industry will be damaged if the past records of the other dairy companies can be monitored by the investors. 1 D. The collective reputation of the dairy industry can be reestablished if Huishan Dairy files bankruptcy.
Regarding to the estimation of market power, the statement that is NOT true is "The cost of the company should be higher than what appears in the financial statement if the feed is exported from a US company, instead of using the company's own pasture.
The estimation of market power is done to analyze the competitive advantage of a company in the market. It is done by analyzing various factors such as cost, market share, etc. The following statements are given:
A. The cost of the company should be higher than what appears in the financial statement if the feed is exported from a US company, instead of using the company's own pasture.This statement is true. The cost of the company should be higher if the feed is exported from a US company instead of using the company's own pasture.
B. The Lerner index of Huishan should be lower than the estimation based on the financial statement if the company underreported the feed cost.This statement is true. The Lerner index of Huishan should be lower than the estimation based on the financial statement if the company underreported the feed cost.
C. The Lerner index of Huishan should be lower than the estimation based on the financial statement if the company overstated its market share.This statement is true. The Lerner index of Huishan should be lower than the estimation based on the financial statement if the company overstated its market share.
D. The report of Muddy water also claimed that the raw milk price of the company, RMB4144/ton, is overstated because the industrial average level is between RMB-4005-4040/ton. If this is true, the mark- up of the company should be higher.This statement is true. If the raw milk price of the company is overstated, then the mark-up of the company should be higher.The statement that is NOT true is A. The cost of the company should be higher than what appears in the financial statement if the feed is exported from a US company, instead of using the company's own pasture. It is because the cost of the company will be higher if the company is using its own pasture instead of exporting feed from a US company. So, the statement is not true. The dishonesty behavior of Huishan Dairy stems from the moral hazard of the company due to lack of public monitoring. The company underreported the feed cost and overstated its market share, which led to the data fraud. Due to this fraud, the collective reputation of the dairy industry was damaged. The investors lost trust in the dairy industry and the past records of other dairy companies were also monitored. This led to the damage of the reputation of the entire dairy industry. If Huishan Dairy files for bankruptcy, it can help in reestablishing the reputation of the dairy industry. It will send a message that any kind of dishonesty behavior will not be tolerated, and companies will be held accountable for their actions.
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You buy a bond with a $1,000 par value today for a price of $910. The band has 7 years to maturity and makes annual coupon payments of $82 per year. You hold the bond to maturity, but you do not reinvest any of your coupons. What was your effective EAR over the holding period? 7.09% O 10.28% 8.14% O 10.05% Expert A
The effective annual rate (EAR) over the holding period of the bond is approximately 10.05%. This calculation takes into account the purchase price, coupon payments, and par value.
To calculate the effective annual rate (EAR) over the holding period, we need to consider the purchase price, coupon payments, and par value of the bond. The purchase price of the bond is $910, which is less than the par value of $1,000. The difference between the purchase price and par value is the discount. In this case, the discount is $1,000 - $910 = $90.
The bond has a maturity period of 7 years and makes annual coupon payments of $82. Since you do not reinvest any of your coupons, the only cash flows you receive are the coupon payments. To calculate the EAR, we need to determine the total cash inflow over the holding period, which consists of the coupon payments and the par value received at maturity. In this case, the total cash inflow is $82 x 7 + $1,000 = $1,574.
The EAR can be calculated using the formula:
[tex]\text{EAR} = \left(\frac{\text{Total cash inflow}}{\text{Purchase price}}\right)^{\frac{1}{\text{holding period}}} - 1[/tex]
Plugging in the values:
[tex]\text{EAR} = \left(\frac{1,574}{910}\right)^{\frac{1}{7}} - 1 \approx 0.1005[/tex]
Converting this to a percentage, the effective annual rate (EAR) over the holding period is approximately 10.05%. Therefore, the correct answer is 10.05%.
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3. The demand for a product is D(p) = 65 − p. There are an indefinite number of potential firms, each of them with
a total cost function C(q) = 4 + q + q2. Determine:
a) What is the fixed cost of each firm?
b) What is the variable cost of each firm?
c) What is the supply of each firm?
d) In the long-run: What is the total number of firms that will operate in this market?
Assume demand drops to D(p) = 63 − q.
e) What will happen to the market structure (price and number of firms) in the short-run?
f) What will happen to the market structure (price and number of firms) in the long-run?
a) Fixed cost of each firm is 4b) Variable cost of each firm is q + q2c) Supply of each firm is obtained from the profit maximization problem.
The profit function is given as follows: $$\pi = p q - C(q)$$Taking the derivative and setting it equal to 0, we obtain: $$p = C_1 + 2 C_2 q$$Substituting the demand equation $p = 65 - q$ into the above equation and solving for q, we obtain: $$q^* = (65 - 4C_1)/6$$Given that $C_1 = 4$, we get $q^* = 61/3$. Thus, the supply of each firm is $q^* = 61/3$.d) In the long-run, firms will enter or exit the market until economic profits are zero. In other words, the long-run equilibrium occurs where the market supply curve intersects the demand curve at a price such that profits are zero.
Therefore, in the long run, the total number of firms that will operate in this market is determined by the equilibrium condition: $$65 - q = 4 + q + q^2$$$$q^2 + 2q - 61 = 0$$Solving for q, we get $q^* = 7.4$ and $q^* = -9.4$. Since we need a positive quantity, $q^* = 7.4$ is the quantity produced by each firm in the long-run equilibrium. The number of firms is then obtained by dividing the market demand by the quantity produced by each firm, which gives: $$N = 65/7.4 = 8.8$$Therefore, in the long-run, there will be 8 firms in the market.e) In the short-run, the market price will remain at $p = 65 - q$, and firms will produce the quantity that maximizes their profits.
Each firm will supply $q^* = 61/3$ units at the price of $p = 65 - q^* \approx 43.67$. Since this price is higher than the short-run equilibrium price, new firms will enter the market, which will increase the supply and drive the price back down to the short-run equilibrium.f) In the long-run, the market price will be lower than the short-run price due to the entry of new firms. This will continue until economic profits are zero, which will occur when the price falls to the long-run equilibrium price. The number of firms will increase until economic profits are zero, which will occur when there are 8 firms in the market, as determined in part (d). Therefore, in the long-run, the market structure will consist of 8 firms producing $q^* = 7.4$ units at the cost of $p = 62.6$.
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(Related to Checkpoint 5.2) (Future value) Leslie Mosallam, who recently sold her Porsche, placed $9,200 in a savings account paying annual compound interest of 7 percent
a. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 3,7, and 17 year(s).
b. Suppose Leslie moves her money into an account that pays 9 percent or one that pays 11 percent. Rework part (a) using 9 percent and 11 percent.
c. What conclusions can you draw about the relationship between interest rates, time, and future sums from the calculations you just did?
a. After placing 59,200 in a savings account paying annual compound interest of 7 percent, the amount of money that will accumulate if Leslie leaves the money in the bank for 3 year(s) is $. (Round to the nearest cent.)
If she leaves the money in the bank for 7 years, the amount of money that will accumulate is $ (Round to the nearest cent.)
If she leaves the money in the bank for 17 years, the amount of money that will accumulate is S. (Round to the nearest cent)
b. If Leslie moves her money into an account that pays 9 percent compounded annually for 3 year(s), the amount of money that will accumulate is $. (Round to the nearest cent.)
If Leslie moves her money into an account that pays 9 percent compounded annually for 7 years, the amount of money that will accumulate is S. (Round to the nearest cent.)
If Leslie moves her money into an account that pays 9 percent compounded annually for 17 years, the amount of money that will accumulate is S. (Round to the nearest cent.)
if Leslie moves her money into an account that pays 11 percent compounded annually for 3 year(s), the amount of money that will accumulate is $7. (Round to the nearest cent.)
If Leslie moves her money into an account that pays 11 percent compounded annually for 7 years, the amount of money that will accumulate is $. (Round to the nearest cent.)
If Leslie moves her money into an account that pays 11 percent compounded annually for 17 years, the amount of money that will accumulate is $. (Round to the nearest cent.)
c. What conclusions can you draw about the relationship between interest rates, time, and future sums from the calculations you just did? There is a relationship between the interest rate used to compound a present sum and the future value of that sum. There is a relationship between the number value of that sum. (Select from the drop-down menus.) years for which the compounding continues and the future
After placing $9,200 in a savings account paying annual compound interest of 7 percent, the amount of money that will accumulate if Leslie leaves the money in the bank for 3 years is $11,154.24 (rounded to the nearest cent).
a.If she leaves the money in the bank for 7 years, the amount of money that will accumulate is $14,646.07 (rounded to the nearest cent). If she leaves the money in the bank for 17 years, the amount of money that will accumulate is $26,073.39 (rounded to the nearest cent).
b. If Leslie moves her money into an account that pays 9 percent compounded annually for 3 years, the amount of money that will accumulate is $11,926.61 (rounded to the nearest cent). If Leslie moves her money into an account that pays 9 percent compounded annually for 7 years, the amount of money that will accumulate is $16,473.34 (rounded to the nearest cent). If Leslie moves her money into an account that pays 9 percent compounded annually for 17 years, the amount of money that will accumulate is $35,312.88 (rounded to the nearest cent). If Leslie moves her money into an account that pays 11 percent compounded annually for 3 years, the amount of money that will accumulate is $12,937.27 (rounded to the nearest cent). If Leslie moves her money into an account that pays 11 percent compounded annually for 7 years, the amount of money that will accumulate is $19,848.01 (rounded to the nearest cent). If Leslie moves her money into an account that pays 11 percent compounded annually for 17 years, the amount of money that will accumulate is $49,162.32 (rounded to the nearest cent).
c. From the calculations, we can conclude that there is a positive relationship between interest rates, time, and future sums. As the interest rate increases, the future value of the initial deposit grows. Additionally, the longer the money is left to compound, the larger the future sum becomes. This shows the power of compounding over time.
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You notice the 10-month (ie 305 day) interest rate in the UK is 4.45%pa, whilst the interest rate in the US is 2.85%pa for the same period. You also note that the GBP/USD is 1.2781 and that the 10-month forward rate is 1.2594. Using the appropriate day count convention for each country, what profit, to two decimal places, can you lock in without any risk if you borrow 10m in the appropriate currency?
In order to determine the profit, we need to calculate the forward exchange rate first:GBP/USD Spot rate = 1.2781USD interest rate = 2.85% per annumGBP interest rate = 4.45% per annumForward Rate = Spot Rate x (1 + (GBP Interest Rate - US Interest Rate) * (Days / GBP Day Count)) / (1 + (US Interest Rate) * (Days / US Day Count))
Where Days = 305 daysGBP Day Count = Actual days per year = 365US Day Count = Actual days per year = 365Forward Rate = 1.2781 x (1 + (0.0445 - 0.0285) * (305 / 365)) / (1 + (0.0285) * (305 / 365))Forward Rate = 1.2371The forward exchange rate is 1.2371.
Now we can calculate the profit. We can borrow £10,000,000 at a rate of 4.45% per annum and convert it into US dollars at the spot rate of 1.2781, which would give us $12,781,000. We can then invest this amount at an interest rate of 2.85% per annum for 305 days, which would give us $12,986,030.
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Greetings Class, While the US, just like any other country, might be very good in producing a good or a service, that good/service might not have a comparative advantage in the global market, and thus, might not be competitive enough for trade. While the US’s agriculture industry produces at a large scale and uses high tech methods in production, it actually doesn’t have comparative advantage relative to other countries whose agriculture products rely on manual cheap labor. Remember, what matters the most in trade is the actual price of a commodity in one country relative to its price in the local market. In the real world, countries’ comparative advantages are "distorted" by trade barriers. Tariffs (taxes imposed on imported goods that are added to the final price consumer end up paying) and quotas (a quantity limit on the commodity that could be imported, and thus limiting the supply of that commodity in the local market), leading to higher prices for both the imported and locally produced commodity (same commodity). The US has extensive trade barriers on agriculture products, and the agriculture industry in the US is considered a "protected industry". Discuss the impact of trade barriers on the well-being of consumers, producers, and the labor force in the local economy. Are trade barriers beneficial to the local economy?
Trade barriers such as tariffs and quotas are not beneficial to the local economy because they negatively impact the well-being of consumers, producers, and the labor force in the local economy. The impact of trade barriers on the well-being of consumers, producers, and the labor force in the local economy is as follows:
Impact on consumers: Consumers suffer the most from trade barriers because they have to pay higher prices for both imported and locally produced goods. Consumers' buying power is reduced as a result of the higher prices, which means they cannot buy as much as they would like.
Impact on producers: Producers in the protected industry benefit from trade barriers because they are protected from foreign competition and can charge higher prices. However, they may become inefficient and uncompetitive as a result of the lack of competition, which can lead to lower quality goods and higher prices. Impact on labor force: Trade barriers can be harmful to the labor force in the protected industry because they can lead to a lack of competition and a lack of innovation. Workers in the protected industry may become complacent and less productive as a result of this lack of competition, which can result in lower wages and fewer job opportunities.
In conclusion, trade barriers are not beneficial to the local economy because they lead to higher prices for consumers, lower quality goods, lower wages for workers, and a lack of competition and innovation in the protected industry.
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_______ refers to the process of evaluating and selecting the _______. Media buying; media mix Media planning; media mix Advertising; media buy Media mixing; media buy Promotion planning; advertising mix
The correct answer is: Media planning; media mix.
Media planning refers to the process of evaluating and selecting the most appropriate media channels to reach the target audience and achieve the advertising objectives. It involves determining which media platforms (such as television, radio, print, digital, etc.) will be used to deliver the advertising message effectively.
Media mix, on the other hand, refers to the combination of different media channels or platforms that a company or advertiser chooses to use in their overall marketing communication strategy. It involves allocating the budget and resources across various media channels to optimize the reach and impact of the advertising campaign.
Therefore, the process of evaluating and selecting the media channels to be used is known as media planning, and the combination of these channels is referred to as the media mix.
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from the perspective of the lessor, two possible lease classifications are:
From the perspective of the lessor, two possible lease classifications are operating leases and finance leases.
Operating Lease: In an operating lease, the lessor retains ownership of the leased asset and provides it to the lessee for a specific period. The lessor takes on the risks and benefits associated with the ownership of the asset. The lessee makes regular lease payments for the use of the asset but does not assume any ownership or long-term obligations. At the end of the lease term, the lessee typically returns the asset to the lessor or has the option to renew the lease.
Finance Lease: In a finance lease, the lessor transfers most of the risks and rewards of ownership to the lessee. The lessee is responsible for the maintenance and insurance of the leased asset. A finance lease is usually a long-term arrangement, and the lessee is considered the economic owner of the asset. The lessee recognizes the leased asset on their balance sheet and typically has a purchase option at the end of the lease term at a predetermined price.
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4. Economic activity continually fluctuates around trend values. Analyzing these deviations is the focus of the short run in economics. a) What is meant by sticky wages and how can they explain the slope of the short Run Aggregate Supply curve. b) Explain why the slope of the Long Run Aggregate Supply curve is different from the short Run Aggregate Supply curve. c) What is the Interest Rate Effect and how does it help us understand the slope of the Aggregate Demand curve? d) How would you expect an increase in Government spending through President Biden's Build Back Better plan (or other such plans) impact the Aggregate Demand curve? Do you believe inflation would increase / decrease or remain unchanged following the enactment of such a plan? Use appropriate charts to support your claim.
Sticky wages refer to the notion that nominal wages are slow to adjust to changes in the economy, in particular to changes in the price level. This stickiness results from a variety of institutional factors such as minimum wage laws, wage contracts, and social norms.
prices are sticky, while in the long run, prices are fully flexible. Due to sticky prices and wages, firms may respond to increased demand by raising prices rather than output. Firms may eventually be able to increase production due to increased demand, but the delay associated with increasing production is due to the time it takes for wages and prices to adjust.
there are no rigidities in the long run, the long-run aggregate supply curve is vertical. The interest rate effect refers to the fact that a change in the price level leads to a change in interest rates, which in turn affects spending. As the price level rises, people will need more money to carry out their transactions, leading to an increased demand for money.
This increased demand for money results in a rise in the interest rate, which discourages borrowing and spending, leading to a contraction of the economy. If the marginal propensity to consume is high, then the multiplier is high, and the shift in the aggregate demand curve is large. This leads to a higher level of inflation in the economy.
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At the beginning of the month, the Painting Department of Skye Manufacturing had 23,000 units in inventory, 70% complete as to materials, and 25% complete as to conversion. The cost of the beginning inventory, $31,650, consisted of $25,400 of material costs and $6,250 of conversion costs. During the month the department started 118,000 units and transferred 124,500 units to the next manufacturing department. Costs added in the current month consisted of $298,600 of materials costs and $541,910 of conversion costs. At the end of the month, the department had 16,500 units in inventory, 40% complete as to materials and 10% complete as to conversion. If Skye Manufacturing uses the weighted average method of process costing, compute the costs per equivalent unit of materials and conversion respectively for the Painting Department. 00:54:26 Ask Multiple Choice $2.47; $4.35. $2.22; $4.29. $2.54; $4.40. $2.54; $4.29. $2.82; $4.55.
The costs per equivalent unit of materials and cost conversion for the Painting Department using the weighted average method of process costing are $2.54 and $4.29 respectively. The formula to calculate the equivalent units of materials or conversion.
Equivalent Units = Units completed and transferred out + Units in ending work-in-process inventory × Percentage of completionFor the Painting Department, the equivalent units of materials and conversion for the current month are as follows. Equivalent units of materials
= Units transferred out + Ending WIP inventory × % of completion of material
= (124,500 units) + (16,500 units × 40%)
= 124,500 + 6,600= 131,100Equivalent units of conversion
= Units transferred out + Ending WIP inventory × % of completion of conversion
= (124,500 units) + (16,500 units × 10%)= 124,500 + 1,650= 126,150.
The next step is to calculate the cost per equivalent unit of materials and conversion for the Painting Department.Cost per equivalent unit of materials
= (Beginning inventory cost of materials + Additional materials costs) ÷ Equivalent units of materials= ($25,400 + $298,600) ÷ 131,100= $323,000 ÷ 131,100= $2.46. Cost per equivalent unit of conversion
= (Beginning inventory cost of conversion + Additional conversion costs) ÷ Equivalent units of conversion= ($6,250 + $541,910) ÷ 126,150= $548,160 ÷ 126,150
= $4.34 (rounded to two decimal places)Therefore, the costs per equivalent unit of materials and conversion respectively for the Painting Department using the weighted average method of process costing are $2.54 and $4.29 respectively. The closest answer choice to this is $2.54; $4.29.
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2. Light1 has an idea of creating a shop that sells letters. For selling the letters he will have to buy paper and ink
at about $0.2 per letter and will take about 1 min per letter. The time that he takes writing the letters, could be
spent driving a taxi for $18 an hour. He will also have to rent a sophisticated printer for 29, 000 a month. He hires
his friend Ryuk for a one time fee of $10, 000 to perform market research and finds that letters can be sold at $1.5
each, and total demand is about 30, 000 letters a month .
a) What are the fixed costs of doing his start up?
b) What are the variable costs?
c) After doing the market research but before deciding to operate or not. Is there any sunk cost?
d) After talking to Ryuk, will Light establish his letter firm?
Unexpectedly, in the month of November, after paying for the rent of the printer, a review for Light’s letters is
revealed, that classified the letters as deathly, therefore the expected demand for November falls to just 2 letters
that can be sold at $2.5.
e) Will Light sell the two letters or will he decide to close his shop for November?
f) If the fall in demand is permanent and demand will be 2 letters a month forever for $2.5. Will Light close his
business in December?
a) Fixed cost of doing the start-up:Fixed costs refer to those expenses that are not influenced by the production or sales level of a business.
Rent of printer, a one-time fee of $10,000 for market research are the two costs that remain constant regardless of how much Light produces. Thus, the fixed costs of doing the startup are $29,000 + $10,000 = $39,000. b) Variable cost:Variable costs are directly proportional to production level. Light has to buy paper and ink at $0.2 per letter and will take about 1 min per letter to produce the letters. Thus, the variable costs of producing one letter = cost of paper and ink + Opportunity cost of not driving a taxi = $0.2 + $0.3 = $0.5 per letter.
Therefore, the variable costs of producing 30,000 letters = 30,000*0.5= $15,000. c) Yes, the cost of Ryuk’s market research is a sunk cost. It is a one-time fee and has already been paid, therefore it can't be recovered. d) The total revenue that Light would earn by producing 30,000 letters per month would be $1.5 x 30,000 = $45,000. Total costs would be variable costs + fixed costs = $15,000 + $29,000 + $10,000 = $54,000. As the costs of doing business are higher than the revenue, Light should not establish the letter firm.
e) Expected revenue in November by selling 2 letters = $2.5 x 2 = $5. As it is more than variable cost, which is $0.5 per letter ($0.2 cost of paper and ink + $0.3 opportunity cost), Light will sell the two letters. f) If the demand is only two letters per month for $2.5 each, then the revenue earned would be $5. The total costs would be fixed cost + variable cost = $29,000 + $1 = $29,001. Thus, as the cost of doing business exceeds revenue, Light should close his business in December.
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Excel Online Structured Activity: TIE ratio
MPI Incorporated has 16 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 11%, and its return on assets (ROA) is 5%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.
X
Open.spreadsheet
What is MPI's times-interest-earned (TIE) ratio? Round your answer to two decimal places.
To calculate the Times Interest Earned (TIE) ratio, we need to use the formula:
TIE = Earnings Before Interest and Taxes (EBIT) / Interest Expense
Given information:
Assets: $16 billion
Tax Rate: 35%
Basic Earning Power (BEP) ratio: 11%
Return on Assets (ROA): 5%
First, we need to calculate EBIT using the BEP ratio:
EBIT = BEP * Total Assets
EBIT = 0.11 * $16 billion
EBIT = $1.76 billion
Next, we need to calculate the interest expense. Since the interest expense is not provided in the question, we'll need additional information to calculate it accurately. Without the interest expense, we cannot determine the TIE ratio.
Please provide the interest expense or any additional information related to interest payments so that we can calculate the TIE ratio accurately.
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On dec. 31, 2020, ABC Corp issued 4-year, 7% bonds with $3,000,000 as par value. ABC Corp. received $3,360,000 in cash. the bond interest is paid semiannually on june 30 and December 31 every year.
Compute the following:
Total bonds premium:
Interest Paid in cash semianually:
The Semiannual amortization amount of the bond premium:
Total bonds interest expense over the 4 years:
Total bonds premium: The total bonds premium is calculated as the difference between the issue price of the bonds and the par value. In this case, the issue price is $3,360,000 and the par value is $3,000,000, so the total bonds premium is $360,000.
Interest Paid in cash semiannually: The interest paid in cash semiannually is calculated as the bond's par value multiplied by the bond's interest rate, divided by 2. In this case, the bond's par value is $3,000,000, the bond's interest rate is 7%, and the interest payments are made semiannually, so the interest paid in cash semiannually is $105,000.
The Semiannual amortization amount of the bond premium: The semiannual amortization amount of the bond premium is calculated as the total bonds premium divided by the number of semiannual periods over which the bonds will be outstanding. In this case, the total bonds premium is $360,000, the bonds will be outstanding for 8 semiannual periods (4 years x 2 semiannual periods/year), so the semiannual amortization amount of the bond premium is $45,000.
Total bonds interest expense over the 4 years: The total bonds interest expense over the 4 years is calculated as the sum of the semiannual interest payments and the semiannual amortization amounts of the bond premium. In this case, the semiannual interest payments are $105,000 and the semiannual amortization amounts of the bond premium are $45,000, so the total bonds interest expense over the 4 years is $210,000 per semiannual period, or $840,000 over the 4 years.Total bonds premium: The total bonds premium is calculated as the difference between the issue price of the bonds and the par value. In this case, the issue price is $3,360,000 and the par value is $3,000,000, so the total bonds premium is $360,000.
Interest Paid in cash semiannually: The interest paid in cash semiannually is calculated as the bond's par value multiplied by the bond's interest rate, divided by 2. In this case, the bond's par value is $3,000,000, the bond's interest rate is 7%, and the interest payments are made semiannually, so the interest paid in cash semiannually is $105,000.
The Semiannual amortization amount of the bond premium: The semiannual amortization amount of the bond premium is calculated as the total bonds premium divided by the number of semiannual periods over which the bonds will be outstanding. In this case, the total bonds premium is $360,000, the bonds will be outstanding for 8 semiannual periods (4 years x 2 semiannual periods/year), so the semiannual amortization amount of the bond premium is $45,000.
Total bonds interest expense over the 4 years: The total bonds interest expense over the 4 years is calculated as the sum of the semiannual interest payments and the semiannual amortization amounts of the bond premium. In this case, the semiannual interest payments are $105,000 and the semiannual amortization amounts of the bond premium are $45,000, so the total bonds interest expense over the 4 years is $210,000 per semiannual period, or $840,000 over the 4 years.Total bonds premium: The total bonds premium is calculated as the difference between the issue price of the bonds and the par value. In this case, the issue price is $3,360,000 and the par value is $3,000,000, so the total bonds premium is $360,000.
Interest Paid in cash semiannually: The interest paid in cash semiannually is calculated as the bond's par value multiplied by the bond's interest rate, divided by 2. In this case, the bond's par value is $3,000,000, the bond's interest rate is 7%, and the interest payments are made semiannually, so the interest paid in cash semiannually is $105,000.
The Semiannual amortization amount of the bond premium: The semiannual amortization amount of the bond premium is calculated as the total bonds premium divided by the number of semiannual periods over which the bonds will be outstanding. In this case, the total bonds premium is $360,000, the bonds will be outstanding for 8 semiannual periods (4 years x 2 semiannual periods/year), so the semiannual amortization amount of the bond premium is $45,000.
Total bonds interest expense over the 4 years: The total bonds interest expense over the 4 years is calculated as the sum of the semiannual interest payments and the semiannual amortization amounts of the bond premium. In this case, the semiannual interest payments are $105,000 and the semiannual amortization amounts of the bond premium are $45,000, so the total bonds interest expense over the 4 years is $210,000 per semiannual period, or $840,000 over the 4 years.
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Evaluate the impact of political instability on the country's economy
Political instability is a condition that can negatively impact a country's economic situation. Some ways political instability affects a country's economy Decrease in Investment and Business, Unemployment, Government Spending.
It is a scenario where the ruling party or political leadership of a country is uncertain or shaky. It has a significant impact on the economy of a country in terms of investment and business, foreign policy, unemployment, and government spending. The following are some ways political instability affects a country's economy:
1. Decrease in Investment and Business: In a situation of political instability, investors are less likely to invest in the country because of the perceived risks associated with the political climate.
It is because they are unsure whether their investment will be protected or whether the rules and regulations that govern business operations will remain stable.
2. Unemployment: Political instability leads to a lack of investment, which, in turn, results in the loss of job opportunities. It is because companies are reluctant to invest in a country where political instability is rampant.
3. Foreign Policy: Political instability can negatively affect a country's foreign policy. It makes it challenging for the government to make and maintain diplomatic relations, as foreign countries may not be willing to engage with a politically unstable government.
4. Government Spending: Political instability often results in the government having to spend more on security measures.
Such measures are necessary to maintain law and order and to deal with protests, strikes, and civil unrest. As a result, the government has less money to invest in infrastructure, social welfare, and other areas of the economy.
In conclusion, political instability has a significant impact on a country's economy. It leads to a decrease in investment and business opportunities, increased unemployment, a challenging foreign policy environment, and reduced government spending.
Countries, therefore, need to work towards political stability to promote economic growth and development.
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