Harold is not personally liable for the contract with Wimbledon since he signed the contract as an authorized agent of Ashe Entertainment Corporation, which was incorporated on July 1.
According to the Model Business Corporation Act (MBCA), is Harold personally liable on the contract with Wimbledon? Harold is not personally liable on the contract with Wimbledon.
A corporation is a distinct entity, separate from its owners, and it can contract with others, borrow money, and buy or sell assets. As a result, the people who run the corporation are generally not personally liable for the company's debts or obligations.
In this case, Harold chose to incorporate his sole proprietorship, creating a new corporation called Ashe Entertainment Corporation. The articles of incorporation were filed with the secretary of state on July 1.
The fact that Harold signed the contract with Wimbledon in the name of Ashe Entertainment Corporation shows that he was attempting to act on behalf of the corporation rather than as an individual.
After the corporation is established, it becomes responsible for its own obligations and debts, and the owners or shareholders are generally not personally liable for them.
As a result, Harold is not personally liable for the contract with Wimbledon since he signed the contract as an authorized agent of Ashe Entertainment Corporation, which was incorporated on July 1.
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Pronghorn Company manufactures automobile components for the worldwide market. The company has three large production facilities in Virginia, New Jersey, and California, which have been operating for many years. Brett Harker, vice president of production, believes it is time to upgrade operations by implementing computer-integrated manufacturing (CIM) at one of the plants. Brett has asked corporate controller Connie Carson to gather information about the costs and benefits of implementing CIM. Carson has gathered the following data: Initial equipment cost $6,460,000 Working capital required at start-up $ 600,000 Salvage value of existing equipment 96,450 Annual operating cost savings $ 1,080,240 Salvage value of new equipment at end of its useful life $ 257,200 Working capital released at end of its useful life 600,000 Useful life of equipment 10 years Pronghorn Company uses a 12% discount rate. Andrew Burr, manager of the Virginia plant, has been looking over Carson's information and believes she has missed some important benefits of implementing CIM. Burr believes that implementing CIM will reduce scrap and rework costs by $192,900 per year. The CIM equipment will take up less floor space in the factory than the old equipment, freeing up 6,000 square feet of space for a planned new research facility. Initial plans called for renting additional space for the new facility, at a cost of $26 per square foot. Calculate a revised net present value and internal rate of return using this additional information. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to O decimal places, e.g. 58,971. Round internal rate of return to 2 decimal places, e.g. 15.26%.) Net present value $ Internal rate of return % Does your recommendation change as a result of this new information?
The IRR for the revised cash flows is calculated to be approximately 4.99%.
To calculate the revised net present value (NPV) and internal rate of return (IRR), we need to incorporate the additional information provided by Andrew Burr.
Revised NPV calculation:
1. present value of the annual operating cost savings and the scrap/rework cost reduction:
PV1 = Annual operating cost savings / (1 + Discount rate)ⁿ
PV1 = $1,080,240 / (1 + 0.12)¹ = $964,107.14 (rounded)
PV2 = Scrap/rework cost reduction / (1 + Discount rate)ⁿ
PV2 = $192,900 / (1 + 0.12)¹ = $172,232.14 (rounded)
2. Calculate the present value of the working capital released at the end of its useful life:
PV3 = Working capital released / (1 + Discount rate)ⁿ
PV3 = $600,000 / (1 + 0.12)¹⁰ = $206,971.30 (rounded)
3. Calculate the present value of the salvage value of the new equipment at the end of its useful life:
PV4 = Salvage value of new equipment / (1 + Discount rate)ⁿ
PV4 = $257,200 / (1 + 0.12)¹⁰ = $89,058.89 (rounded)
4. Calculate the total present value of cash flows:
Total PV = PV1 + PV2 + PV3 + PV4
Total PV = $964,107.14 + $172,232.14 + $206,971.30 + $89,058.89 = $1,432,369.47 (rounded)
Revised NPV = Total PV - Initial equipment cost - Working capital required at start-up
Revised NPV = $1,432,369.47 - $6,460,000 - $600,000 = -$5,627,630.53 (rounded)
IRR calculation:
Using the cash flows (including the additional benefits) and the initial investment, we can calculate the IRR. In this case, the cash flows consist of the annual operating cost savings, scrap/rework cost reduction, working capital released, and salvage value of the new equipment.
Based on the revised NPV being negative and the IRR being less than the discount rate, the recommendation would still be not to proceed with the implementation of CIM at the Virginia plant. The additional benefits considered in the analysis were not sufficient to change the conclusion.
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State or imply the bad news in the opening statement of a bad news message
TRUE
FALSE
It is FALSE to state or imply the bad news in the opening statement of a bad news message.
It is generally not recommended to state or imply the bad news in the opening statement of a bad news message. The opening of a bad news message should aim to establish a positive and empathetic tone, build rapport with the recipient, and provide context for the message. The bad news should be delivered in a clear and straightforward manner but typically reserved for the middle or later part of the message.
Starting a bad news message with the bad news itself can create an immediate negative impact and may cause the recipient to become defensive or upset. Instead, it is advisable to begin with a buffer or a neutral statement that prepares the recipient for the upcoming news. The opening should focus on establishing understanding, empathy, and providing any relevant background information. This approach helps to soften the blow and allows the recipient to mentally prepare for the bad news while maintaining a more receptive mindset.
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I have invested $500,000 in the bank. They tell me the interest rate will be 12% per year compounded annually. What is the annual nominal interest rate? a. 19% b. 12.86 % c. 1.01% d. 12 %
To calculate the annual nominal interest rate, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = Final amount
P = Principal amount (initial investment)
r = Annual interest rate (in decimal form)
n = Number of times interest is compounded per year
t = Number of years
In this case, the principal amount (P) is $500,000, the annual interest rate (r) is 12% or 0.12, the number of times interest is compounded per year (n) is 1 (compounded annually), and the number of years (t) is 1.
Substituting the values into the formula, we have:
A = $500,000(1 + 0.12/1)^(1*1)
A = $500,000(1 + 0.12)^1
A = $500,000(1.12)
A = $560,000
The final amount after one year is $560,000.
To calculate the nominal interest rate, we can use the formula:
Nominal Interest Rate = (A - P) / P
Nominal Interest Rate = ($560,000 - $500,000) / $500,000
Nominal Interest Rate = $60,000 / $500,000
Nominal Interest Rate = 0.12 or 12%
Therefore, the annual nominal interest rate is 12%, which corresponds to option d.
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ECONOMICS-51 The economic order quantity (EOQ) is defined as the order quantity that min- imizes the inventory cost per unit time. Which of the following is NOT an assumption of thc basic EOQ model with no shortages? (A) The demand rate is uniform and constant. (B) There is a positive cost on each unit inventoried. The entire reorder quantity is delivered instantaneously. (D) There is an upper bound on the quantity ordered.
The correct answer is (B) There is a positive cost on each unit inventoried as it is not the assumption of the basic EOQ model with no shortages.
ECONOMICS-51 The economic order quantity (EOQ) is defined as the order quantity that minimizes the inventory cost per unit time. Among the given options, the assumption of the basic EOQ model with no shortages which is not correct is (B) There is a positive cost on each unit inventoried.
What is Economic Order Quantity (EOQ)?Economic Order Quantity (EOQ) is defined as a production order quantity that reduces the total holding and ordering costs. EOQ is an inventory management technique that determines the ideal order quantity that a company should make for its inventory, given a set cost of production, demand rate, and other variables.
The EOQ model is based on the idea that the best order size would be one that minimizes the sum of holding costs and ordering costs. The EOQ formula can be calculated by the following equation: EOQ = √((2DS)/H)Where, D = Demand per periodS = Setup cost per orderH = Holding cost per unitAs the question states, which of the following is NOT an assumption of the basic EOQ model with no shortages?
The basic EOQ model with no shortages includes the following assumptions :A uniform and constant demand rate. There is a positive cost on each unit inventoried. The entire reorder quantity is delivered instantaneously. There is an upper bound on the ordered.
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You are a successful business that has grown dramatically from entrepreneur in a developing nation, to making your mark in North America and Europe. You are ready to issue shares and go public. Would you prefer to be listed on an American Stock Exchange (NYSE) or on a foreign exchange outside of North America? Explain your choice.
As a successful business that has expanded globally, the decision to list on an American Stock Exchange (NYSE) or a foreign exchange outside of North America depends on several factors.
Here are some considerations for each option:
Listing on an American Stock Exchange (NYSE):
Access to a large and liquid market: The NYSE is one of the world's largest and most prestigious stock exchanges, attracting a significant number of investors. Listing on the NYSE can provide access to a deep pool of capital and increase visibility and credibility among investors.
Exposure to North American investors: By listing on the NYSE, a company can attract the attention of North American investors who may be familiar with the market and have a strong interest in investing in international companies.
Regulatory framework and transparency: The NYSE has stringent listing requirements and regulatory standards that enhance transparency and corporate governance. Adhering to these standards can improve investor confidence and potentially attract institutional investors.
Listing on a foreign exchange outside of North America:
Regional market focus: If a company's primary operations and target market are outside of North America, listing on a foreign exchange can provide better access to local investors who may have a deeper understanding of the company's industry and market dynamics.
Regulatory environment and listing requirements: Different exchanges have varying listing requirements and regulations. A company may prefer a foreign exchange if its listing standards are more aligned with the company's specific needs or if it offers certain advantages, such as lower listing fees or less stringent reporting requirements.
Investor preferences: Depending on the company's industry and investor base, listing on a foreign exchange that caters to specific sectors or has a strong investor interest in the company's industry may be advantageous. This can attract investors who have a better understanding of the company's business and growth potential.
Ultimately, the choice between listing on the NYSE or a foreign exchange outside of North America would depend on the company's strategic goals, target market, investor base, regulatory considerations, and the perceived benefits of each exchange. It is crucial to carefully evaluate the pros and cons of each option and consult with financial advisors and legal experts to make an informed decision.
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I need help with the continuation of the work, not in a photo please, I always give my vote. Thanks in advance. Someone already helped me, this is the beginning of the work, according to this information, I need to continue with the other parts. I'm posting the questions separately as per Chegg's guidelines. It is a fictitious studio apartment rental company. I am using Weicher Realtors as an example.
General description of the company - This is a real estate company which deals into rental apartments which are highly affordable and equiped with all modern amenities. The company is based on the value of providing high quality services creating utmost satisfaction for customers using sustainable means and ethical business practices. They provide studio apartments on rent which can be available on a nightly basis as well as monthly basis. They provide multiple amenities in their apartments including chef and laundry services. These apartments are segregated into different segments ranging from Basic amenity apartments which are for travellers looking for a nightly stay, moderately equipped apartments for budget stay and holidaying, premium apartments with high end equipment and interiors, guest house serviced apartments for office rentals and guest rooms for special occassions.
Historical evolution - The idea of the company came to the founders from the experience they had when they used to travel regularly on road trips and trekking during which they were unable to find a suitable and affordable place to stay. They got this idea when they were looking to renovate their house and wanted to do something good for the community. They were staying alone in a large mansion and were hardly visited by people. They felt the need to do something so that they could make use of their time, become more social and give back to the community. They converted their house into a boutique studio rental apartment mansion which gained popularity soon due to the new concept. Since the locality in which they lived was a very serene and good location for tourism a lot of tourists started coming to stay and this success made them to set up properties in other regions as well and within 10 years they had properties in 6 more locations making it a successful chain with different options.
Organization - They started with a small organization and grew to become a 200 employees in these 10 years with a local property manager and other staff needed to maintain the property and provide guest services. They have their corporate office in <<>>, their first rental mansion which helped to manage the business centrally. They have different functional heads who take care of supply chain, people management and financial reporting of the company including regulatory management. The regional managers look after the local sales, marketing and operational activities of their respective properties.
Prepare Chapter 2 of the research work:
2.2 Customers (general information about the company's customers, profile, demographics, buying trends).
Chapter 2 of the research work:The customers of the company are generally tourists and office renters who need a place to stay. The company has different segments of studio apartments that cater to a variety of customers.
Their basic amenity apartments are for travelers looking for a nightly stay. The moderately equipped apartments are for budget stay and holidaying. The premium apartments have high-end equipment and interiors. Guest house serviced apartments are available for office rentals and guest rooms for special occasions. The customer profile of the company is diverse, ranging from solo travelers to business travelers. The majority of the customers are middle-aged people looking for affordable and comfortable accommodation. They are looking for a place to stay with all modern amenities at a reasonable price. They prefer to stay in a place that is centrally located and easily accessible. They tend to choose accommodations based on the amenities provided by the company. Their buying trends depend on the type of apartment they choose. Customers who stay in basic amenity apartments tend to make impulsive buying decisions, while those who stay in premium apartments do extensive research before making a decision. The company needs to cater to the needs of different types of customers by providing them with a range of amenities that suit their needs.
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A corporation purchased 1,000 shares of its $5 par common stock at $10 per share and subsequently sold 500 of the shares at $20 per share. What is the amount of revenue realized from the sale?
A corporation purchased 1,000 shares of its $5 par common stock at $10 per share and subsequently sold 500 of the shares at $20 per share.
The amount of revenue realized from the sale can be calculated by subtracting the cost of 500 shares from the sales revenue of 500 shares. Let’s solve the question step by step.100 wordsSolution:It is important to understand that par value is an arbitrary value assigned to each share by the corporation. Par value has little to do with the market price of a share. Now, let’s proceed to calculate the amount of revenue realized from the sale:The cost of 500 shares = 500 x $10 = $5,000The sales revenue of 500 shares = 500 x $20 = $10,000
Revenue realized from the sale = Sales revenue - Cost of 500 shares= $10,000 - $5,000= $5,000Thus, the amount of revenue realized from the sale of 500 shares is $5,000.
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A corporation currently has a debt to equity (D/E) ratio of 10%,
a beta of 10,000, a treasury rate of 20%, a treasury spread of 20%,
a market return of 15% and a tax rate of 30%. What is the
WACC?.
The WACC (Weighted Average Cost of Capital) is 12.5%. It is calculated by weighting the cost of debt and cost of equity using their respective proportions in the capital structure.
In this case, since the D/E ratio is 10%, the weight of debt is 10%, and the weight of equity is 90%. The cost of debt is determined by the treasury rate plus the treasury spread, which is 40% (20% + 20%). The cost of equity is calculated using the CAPM (Capital Asset Pricing Model) with the beta of 10,000 and the market return of 15%. After calculating the weighted costs and applying the tax rate of 30%, the WACC is obtained as 12.5%.
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Suppose the following information is collected on an application for a loan. a. Annual personal income: $55,991 b. Number of jobs in the past 10 years: 1 c. Ever convicted of a felony: No d. Employer:
There are several factors that are taken into account by lenders before granting a loan, and the given information has several such factors. These factors include the annual personal income, the number of jobs in the past 10 years, and any past criminal history.
In this case, the applicant has an annual personal income of $55,991 which indicates that they have the financial ability to repay the loan.The number of jobs in the past 10 years is also a key consideration for lenders.
In this case, the applicant has only had one job in the past 10 years which may be seen as a positive or negative factor depending on other aspects of their financial profile.Finally, the fact that the applicant has not been convicted of a felony is an important factor as it speaks to their trustworthiness and reliability.
All these factors along with the employer mentioned, helps the lender to make a decision regarding the approval or disapproval of the loan.The lender wants to know the employer of the applicant to see if they are a reputable company and whether or not the applicant is likely to have stable employment going forward.
It is important for the lender to know if the applicant is likely to have a stable source of income in the future so that they can be confident that the loan will be repaid.
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please show written out work for a better understanding XYZ is a water retailer. The market price of common stock is $40,its cash dividend (Do)was $3.52 and the growth rate is expected to be 5.5 percent.Preferred stock has a $30 par value with a 4 percent dividend rate and currently sell for $28 per share.Additional forty-year debt can be issued at par with an 6 percent coupon rate.XYZ marginal tax rate is 40%.Currently XYZ has $500 million market valueof bonds outstanding,$150 million market valueof preferred stock issued,and 15 million shares of common stock issuedpar=$18.XYZ beta is 1.3 and the current market risk premium is seven percent while the T-bill return is 4 percent. The stock over bond premium is 5.8 percent. The current capital structure is consider optimal
A. Find the market weight percent of
- Bond/debt
- Preferred stock
- Common stocklequity
B. Find the required return for only preferred stock
To find the market weight percent of each component, we need to calculate the market value of each component and divide it by the total market value of XYZ.
Given information:
Market price of common stock (Pc) = $40
Cash dividend on common stock (Do) = $3.52
Growth rate (g) = 5.5%
Par value of preferred stock (Pp) = $30
Dividend rate on preferred stock = 4%
Market price of preferred stock (Pp_market) = $28
Market value of bonds outstanding (B_market) = $500 million
Market value of preferred stock issued (P_market) = $150 million
Par value of common stock (Pc_par) = $18
Number of shares of common stock issued = 15 million
Beta (β) = 1.3
Market risk premium = 7%
T-bill return = 4%
Stock over bond premium = 5.8%
Tax rate = 40%
A. Market Weight Percent:
Bond/Debt:
Preferred Stock:
Market value of preferred stock (P_market) = $150 million
Market weight percent of preferred stock = (P_market / Total market value of XYZ) * 100
Market weight percent of preferred stock = ($150 million / $920 million) * 100
Market weight percent of preferred stock ≈ 16.30%
Common Stock/Equity:
Total market value of XYZ = $920 million
Market weight percent of common stock/equity = (Common stock market value / Total market value of XYZ) * 100
Market weight percent of common stock/equity = [(Pc * Number of shares of common stock issued) / $920 million] * 100
Market weight percent of common stock/equity = [($40 * 15 million) / $920 million] * 100
Market weight percent of common stock/equity ≈ 29.35%
B. Required Return for Preferred Stock:
The required return for preferred stock can be calculated using the dividend yield formula:
Required Return for Preferred Stock = Dividend Rate on Preferred Stock / Market Price of Preferred Stock
Required Return for Preferred Stock = 4% / $28
Required Return for Preferred Stock ≈ 0.1429 or 14.29%
Therefore, the market weight percent of each component is:
Bond/Debt: Approximately 54.35%
Preferred Stock: Approximately 16.30%
Common Stock/Equity: Approximately 29.35%
The required return for only preferred stock is approximately 14.29%.
User
Step 1: Calculate the after-tax cost of the lease payment
Lease payment = $345,000 per year
Tax rate = 21%
After-tax cost of lease payment = Lease payment × (1 - Tax rate)
After-tax cost of lease payment = $345,000 × (1 - 0.21)
After-tax cost of lease payment = $345,000 × 0.79
After-tax cost of lease payment = $272,550
Step 2: Calculate the present value of the lease payments
Interest rate = 6%
Number of years = 7
Present value factor = 1 - (1 / (1 + Interest rate))^Number of years
Present value factor = 1 - (1 / (1 + 0.06))^7
Present value factor ≈ 1 - (1 / 1.41851)
Present value factor ≈ 1 - 0.70506
Present value factor ≈ 0.29494
Present value of lease payments = After-tax cost of lease payment × Present value factor
Present value of lease payments = $272,550 × 0.29494
Present value of lease payments ≈ $80,341.02
Step 3: Calculate the reduction in debt capacity
Reduction in debt capacity = Present value of lease payments
The reduction in debt capacity if the company signs the lease is approximately $80,341.02.
User
Option 1: Purchase the machine
Step 1: Calculate the annual depreciation expense
Depreciation expense = Cost of the machine / Useful life
Depreciation expense = $4,200,000 / 4
Depreciation expense = $1,050,000
Step 2: Calculate the tax shield from depreciation
Tax shield = Depreciation expense * Tax rate
Tax shield = $1,050,000 * 0.22
Tax shield = $231,000
Step 3: Calculate the after-tax cash flow for each year
Year 1:
After-tax cash flow = (Cost of the machine - Tax shield) + (Interest payment - Tax shield)
After-tax cash flow = ($4,200,000 - $231,000) + ($1,050,000 - $231,000)
After-tax cash flow = $3,969,000
Years 2-4:
After-tax cash flow = (Depreciation expense - Tax shield) + (Interest payment - Tax shield)
After-tax cash flow = ($1,050,000 - $231,000) + ($1,050,000 - $231,000)
After-tax cash flow = $1,839,000
Step 4: Calculate the NPV of the cash flows
Discount rate = Interest rate = 6%
NPV = (After-tax cash flow / (1 + Discount rate)^Year) + ... + (After-tax cash flow / (1 + Discount rate)^Year)
NPV = ($3,969,000 / (1 + 0.06)^1) + ($1,839,000 / (1 + 0.06)^2) + ($1,839,000 / (1 + 0.06)^3) + ($1,839,000 / (1 + 0.06)^4)
NPV ≈ $6,461,690.79
Option 2: Lease the machine
Step 1: Calculate the NPV of the lease payments
Lease payment = $1,170,000 per year
Discount rate = Interest rate = 6%
NPV = (Lease payment / (1 + Discount rate)^Year) + .. + (Lease payment / (1 + Discount rate)^Year)
NPV = ($1,170,000 / (1 + 0.06)^1) + ($1,170,000 / (1 + 0.06)^2) + ($1,170,000 / (1 + 0.06)^3) + ($1,170,000 / (1 + 0.06)^4)
NPV ≈ $3,544,773.52
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Question 65
Barter economy
A) generates lower storage costs compared to the monetary economy B) makes price comparisons easier compared to the monetary economy
C) globalizes trade compared to the monetary economy
D) largely restricts the international trade compared to the monetary economy
The barter economy is restricted to regions or communities and does not offer a reliable means of trade for international transactions. Hence, the barter system does not globalize trade compared to the monetary economy.
Barter economy is the system that helps people to trade goods and services without the use of currency. It is a system of exchange of goods or services that is based on mutual acceptance of each other’s goods or services and does not involve the use of money.
In a barter economy, people rely on the value of their goods and services rather than on the value of money. Therefore, it is not only the goods and services that have value in the barter system but also the skills and knowledge that people possess.
The barter economy generates lower storage costs compared to the monetary economy. In a barter economy, people do not need to store money to trade. This is because the barter economy relies on the exchange of goods and services and not on the exchange of money.
it is difficult for people to trade goods and services across borders. This is because different countries have different currencies and different values for their goods and services.
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A survey shows that on average, 50 people go to the movies when the price is $6.50 and 250 people go when the price is $8.75. Question: Does this violate the law of supply and demand? If yes, say why, if not indicate why not. 1. Construct appropriate demand and supply curves to illustrate what you think caused the price change in this question. You must be clear on what factors that you think contribute to the price change (i.e., what shifts the demand and/or the supply). 2. Please make sure that you use the following terms (correctly) in your answers. • demand • quantity demanded • supply • quantity supplied the market price at an equilibrium
A survey results indicate that when the movie ticket price increases from $6.50 to $8.75, the quantity demanded decreases from 50 people to 250 people. This situation does not violate the law of supply and demand.
Demand and Supply Curves:
To illustrate the price change, we can use demand and supply curves. In this case, the decrease in quantity demanded suggests a leftward shift in the demand curve. The factors that may have caused this shift could include:
a) Decreased consumer income: If there has been a decrease in consumer income, people may have less disposable income available for entertainment, leading to a decrease in the quantity demanded.
b) Availability of substitutes: If there are more substitute forms of entertainment (e.g., streaming services, home theaters), consumers may choose alternative options when the price of movie tickets increases.
On the supply side, if there are no significant changes in production costs or the number of theaters, the supply curve is likely to remain stable.
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"
All organizational activities working toward the adoption,
management, and routinization of an innovation, such as a new
information system is referred to as _ (blank) _. Select one: a.
project risk b
"
The correct option is "a. Project implementation."
Project implementation refers to all organizational activities that work towards the adoption, management, and routinization of an innovation, such as a new information system. The implementation of a new project is a complex process that involves a wide range of activities, including planning, execution, monitoring, and control.
It also includes the integration of the new system into existing operations, training of personnel, and the evaluation of the system's effectiveness.
Project implementation is an essential component of project management. It ensures that projects are completed on time, within budget, and to the satisfaction of stakeholders. Effective implementation requires careful planning, clear communication, and a focus on achieving project objectives.
Successful project implementation requires the development of a detailed project plan that outlines all the activities required to complete the project and their timelines.
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Which of the following situations would require a company to budget potential losses on currency exchange rates as a variable cost per unit? Multiple Choice The currency exchange rate between the countries has been stable for many years and never fuctuates The two countries use the same currency The seller receives poyment and ships the items to the seler usually within a maximum of 3 business days There are long delays between the period when the money is received and the moment the goods are sent to the customer for example custom orders paid in advance)
A situation where a company would need to budget potential losses on currency exchange rates as a variable cost per unit is when there are delays between receiving payment and delivering goods, especially for custom orders paid in advance, as exchange rates can fluctuate and result in losses.
A situation where a company would require to budget potential losses on currency exchange rates as a variable cost per unit is: when there are long delays between the period when the money is received and the moment the goods are sent to the customer. Custom orders paid in advance.Explanation:Variable costs are expenses that change with production output. Variable costs per unit remain constant but fluctuate in total based on the volume of units produced. In business, it is essential to plan for the future to estimate revenue, expenses, and profit. Budgeting is the practice of forecasting the future based on previous data and actual information to achieve business goals.A situation where a company would require to budget potential losses on currency exchange rates as a variable cost per unit is when there are long delays between the period when the money is received and the moment the goods are sent to the customer. Custom orders paid in advance. In such a case, there is a risk that exchange rates may fluctuate unfavorably between the time that the order is placed and the time that it is delivered. This may lead to potential losses on currency exchange rates as a variable cost per unit.
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6. The following table shows the relationship between the number of patients and the total costs for Dr. Smile (orthodontist) and Dr. Ray (radiologist) before and after they opened a joint office. Before After Dr. Smile Dr. Ray Dr. Smile's Dr. Ray's Patients Cost patients patients Cost Patients 10 Cost 50 10 60 10 10 100 20 100 20 100 20 20 180 30 150 30 130 30 30 250 A. Does Dr. Smile indicate economies of scale? Explain. B. Does Dr. Ray indicate economies of scale? Explain. C. Does the joint office indicate economies of scope? Explain.
Economies of scale refer to the cost savings that a company can attain by producing more goods or services. Economies of scale occur when the cost per unit of production decreases as output increases.
Dr. Smile shows economies of scale before and after the joint office was established because as the number of patients increased, the cost per patient decreased. Dr. Smile's cost per patient decreased from $10 (before) to $6 (after). Dr. Smile thus enjoys economies of scale.
Economies of scale refer to the cost savings that a company can attain by producing more goods or services. Economies of scale occur when the cost per unit of production decreases as output increases. Dr. Ray did not show economies of scale before and after the joint office was established since the cost per patient remained the same.
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17. Apple SA. had sales of €85,000, a profit margin of 4%, and
dividends of €1,190. What is the plowback ratio? Show your
calculations
A) 33.42%
B) 65.00%
C) 75.00%
D) 95.50%
To calculate the plowback ratio, we need to determine the portion of the earnings that is reinvested back into the company rather than distributed as dividends. The formula for the plowback ratio is:
Plowback ratio = (Net Income - Dividends) / Net Income
Given that Apple SA. had sales of €85,000 and a profit margin of 4%, we can calculate the net income:
Net Income = Sales * Profit Margin
Net Income = €85,000 * 0.04
Net Income = €3,400
Next, we can substitute the values into the plowback ratio formula:
Plowback ratio = (€3,400 - €1,190) / €3,400
Plowback ratio = €2,210 / €3,400
Plowback ratio ≈ 0.65
Therefore, the plowback ratio for Apple SA. is approximately 0.65 or 65.00%.
From the given options:
A) 33.42%
B) 65.00%
C) 75.00%
D) 95.50%
The correct answer is B) 65.00%, which matches the calculated plowback ratio.
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Suppose the market is perfectly competitive. When total revenue received by a firm can never cover the total variable costs, the firm in short run ____
O should shut down. O should stay open. O makes a profit. O breaks even. O should increase production.
If the market is perfectly competitive and when the total revenue earned by a firm can never cover the total variable costs, the firm in short run should shut down. It's because in this scenario the company is incurring losses.
To understand why the firm should shut down, let's consider the case when the company is operating and facing losses. In the short run, the company can't adjust all its inputs; in fact, it can only adjust a few of them. The company may be able to control its labor and material costs but not its fixed costs. Hence, in the short run, the company is stuck with the fixed costs. If the revenue received by the company can't cover its variable cost, it is not even close to covering the fixed costs. So, in this case, the firm should shut down. In the long run, however, the firm can adjust all its inputs, and if it can't cover all its costs, it will exit the market. Hence, in the long run, a firm that is not covering its costs should exit the market.
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"Globalization" is often used to refer to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. This process is usually recognized as being driven by a combination of economic, technological, sociocultural, political and biological factors. The term can also refer to the transnational dissemination of ideas, languages, or popular culture.
In the discussion forum for Unit 1 Lesson 3 Globalization please post your response to the following questions and comment/provide feedback to at least one other student’s post.
1) What are the benefits of globalization for the average person?
2) What are the drawbacks of globalization for the average person?
1. Benefits of globalization for the average personGlobalization has led to significant benefits for the average person. It has created a wider range of job opportunities as companies expand their operations globally, making it easier for people to find work in their field.
Furthermore, globalization has made it easier for people to access goods and services from around the world at lower prices, which has improved their standard of living. It has also brought about increased cultural awareness and understanding, as well as greater opportunities for education and travel.2. Drawbacks of globalization for the average personDespite the many benefits, globalization has also brought about several drawbacks for the average person. It has led to increased competition in the job market, which has resulted in a decline in wages in some sectors. This has made it more difficult for people to make a living, especially those in low-skilled or manual jobs.
Moreover, globalization has led to the homogenization of cultures, with the spread of Western ideals and values. This has eroded local traditions and languages, leading to a loss of cultural diversity. Finally, globalization has also contributed to environmental degradation, as companies seek to exploit natural resources in developing countries, leading to deforestation and other environmental problems.
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Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers 25,000 hours Account inquiry $750,000 Account billing $250,000 100,000 lines Account verification accounts $173.250 70,000 accounts Correspondence letters $84.000 7.000 letters The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 3,000 hours 3,500 hours Account billing lines 700,000 lines 750,000 lines Account verification accounts 9,000 accounts 7,000 accounts Correspondence letters 2,200 letters 1.600 letters Using ABC costing method, calculate the total cost allocated to department A.
Using the ABC costing method, the total cost allocated to Department A is approximately $355,071.24.
To calculate the total cost allocated to Department A using the ABC costing method, we need to allocate the costs based on the activity-cost drivers and the usage of those drivers by Department A.
Let's calculate the cost allocation for each activity:
1.. Account inquiry:
Cost driver: Hours
Total cost: $750,000
Usage by Department A: 3,000 hours
Allocation to Department A: (3,000 hours / 25,000 hours) * $750,000 = $90,000
2. Account billing:
Cost driver: Lines
Total cost: $250,000
Usage by Department A: 700,000 lines
Allocation to Department A: (700,000 lines / 1,450,000 lines) * $250,000 = $120,689.66
3. Account verification:
Cost driver: Accounts
Total cost: $173,250
Usage by Department A: 9,000 accounts
Allocation to Department A: (9,000 accounts / 16,000 accounts) * $173,250 = $96,750
4. Correspondence:
Cost driver: Letters
Total cost: $84,000
Usage by Department A: 2,200 letters
Allocation to Department A: (2,200 letters / 3,800 letters) * $84,000 = $48,631.58
Now, let's sum up the allocated costs for Department A:
Total cost allocated to Department A = $90,000 + $120,689.66 + $96,750 + $48,631.58 = $355,071.24
Therefore, using the ABC costing method, the total cost allocated to Department A is approximately $355,071.24.
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Question 6 1 pts Short term capital gains are taxed at the preferential capital gains rates. True O False Question 7 1 pts Gain on a taxpayer's sale of personal residence is excluded if the taxpayer reinvests the proceeds in a similar residence within 2 1/2 years. O True False
Question 6: False. Short-term capital gains are not taxed at preferential capital gains rates. They are typically taxed at the individual's ordinary income tax rates. Preferential capital gains rates are generally applicable to long-term capital gains.
Question 7: True. Gain on a taxpayer's sale of a personal residence can be excluded from taxation if certain requirements are met. One of the requirements is that the taxpayer reinvests the proceeds in a similar residence within 2 1/2 years. This exclusion is known as the primary residence exclusion or the home sale exclusion.
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In a perfectly competitive market , market demand is given by P = 81 - 2Q and market supply is P = 60 + 1 Each firm has short run marginal cost MC = 120Q + 1 and short run average total cost of ATC = 60Q + 3.75 / Q + 1 ATC for each firm is minimized at Q = 0.25 where minATC $31.00. Assume firms are profit maximizers.
What is each firms profit/loss in the short run?
a)$610.00
b)$11.25
c) $7.22
d) $0
Option (d) is the correct answer The profit/loss for each firm in the short run is $0.
In a perfectly competitive market, firms aim to maximize their profits. To determine the profit/loss, we compare the market price (P) with the firm's average total cost (ATC). At the quantity where ATC is minimized (Q = 0.25), the firm's ATC is $31.00. Since the market price is determined by the intersection of market demand and supply, we set the market demand equal to market supply: 81 - 2Q = 60 + Q.
Solving for Q, we find Q = 7. If each firm produces Q = 7, the market price is $67 (substituting Q into either the demand or supply equation). Comparing this market price ($67) with the firm's ATC ($31.00), we can see that the firm is neither making a profit nor incurring a loss, resulting in a profit/loss of $0. Therefore, option (d) $0 is the correct answer.
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Can you give 6 recomendation to improve mobile commerce of dominos pizza delivery online?
Optimizing the mobile commerce experience for Domino's Pizza delivery online requires a multi-faceted approach. By focusing on mobile optimization, developing a dedicated mobile application, implementing a responsive design, providing easy payment methods, integrating a customer service chatbot, and streamlining the checkout process, Domino's Pizza can significantly enhance its mobile commerce capabilities and provide a seamless and convenient ordering experience for its customers.
To improve the mobile commerce of Domino's Pizza delivery online, the following six recommendations are suggested:
1. Optimize your website and application for mobile devices:
Mobile optimization is crucial to enhance the user experience on mobile devices. By optimizing the website and application, Domino's Pizza can ensure that it is easy to navigate, loads quickly, and provides a seamless ordering process for mobile users.
2. Develop a mobile application:
Creating a dedicated mobile application can significantly improve the mobile commerce experience. An app offers a streamlined interface, personalized features, and convenient ordering options, resulting in increased customer engagement and loyalty.
3. Develop a responsive design:
Implementing a responsive design ensures that the website adapts to different screen sizes and devices. This approach creates a consistent and user-friendly experience for customers, regardless of whether they are using smartphones, tablets, or other mobile devices.
4. Provide an easy payment method:
Simplifying the payment process is essential for mobile commerce. Offering a variety of payment options, such as debit cards, credit cards, and e-wallets, enables customers to choose their preferred method and complete transactions quickly and securely.
5. Implement a customer service chatbot:
Integrating a customer service chatbot can enhance the support system for mobile users. The chatbot can address common queries, assist with order tracking, handle complaints, and gather customer feedback, ensuring a seamless and efficient customer service experience.
6. Make the checkout process simple and fast:
The checkout process should be streamlined and user-friendly to minimize friction and maximize conversions. By reducing the number of steps required to place an order and optimizing form fields for mobile entry, Domino's Pizza can enhance the overall mobile shopping experience.
To improve mobile commerce, optimizing the website and application for mobile devices is essential. This ensures that the platform is user-friendly, loads quickly, and provides a seamless ordering process. Developing a dedicated mobile application further enhances the experience by offering personalized features and convenient ordering options. Implementing a responsive design allows the website to adapt to different devices, creating consistency for users. Offering a variety of payment methods simplifies the payment process. Integrating a customer service chatbot improves support and enhances the overall customer experience. Finally, simplifying the checkout process reduces friction and encourages customers to complete their orders.
In conclusion, optimizing the mobile commerce experience for Domino's Pizza delivery online requires a multi-faceted approach. By focusing on mobile optimization, developing a dedicated mobile application, implementing a responsive design, providing easy payment methods, integrating a customer service chatbot, and streamlining the checkout process, Domino's Pizza can significantly enhance its mobile commerce capabilities and provide a seamless and convenient ordering experience for its customers.
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Mike and Tim spend each workday assembling bicycles and fixing computers. Mike can assemble 24 bicycles in a single day, while Tim can assemble 18 bicycles in a single day. Based upon this information alone, we know that Mike possesses an absolute advantage in assembling bicycles. Tim possesses an absolute advantage in fixing computers. Mike possesses a comparative advantage in assembling bicycles. More than one (perhaps all) of the above answers is correct.
If we compare the opportunity cost of Mike assembling bicycles versus the opportunity cost of him fixing computers, we might find that he has a comparative advantage in fixing computers.
Mike and Tim are two persons who work together assembling bicycles and fixing computers every workday. Mike can assemble 24 bicycles in a single day while Tim can assemble 18 bicycles in a single day. Based on this data, we can say that Mike has an absolute advantage in assembling bicycles. Similarly, Tim has an absolute advantage in fixing computers. However, we can also say that Mike has a comparative advantage in assembling bicycles.Therefore, the answer to the question is that more than one (perhaps all) of the above answers are correct. The reason for this is because the term "absolute advantage" refers to the ability of a producer to create a good or service with fewer resources. So, if we compare the amount of time and resources it takes for Mike to assemble 24 bicycles, versus the amount of time and resources it takes Tim to assemble 18 bicycles, Mike has the absolute advantage in assembling bicycles. He can produce more bicycles than Tim in the same amount of time.On the other hand, "comparative advantage" refers to the ability of a producer to produce a good or service at a lower opportunity cost. This means that Mike might be better at assembling bicycles than Tim, but if he could make more money by fixing computers instead, then he has a comparative advantage in fixing computers. Therefore, if we compare the opportunity cost of Mike assembling bicycles versus the opportunity cost of him fixing computers, we might find that he has a comparative advantage in fixing computers.
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Suppose Russia sells its oil to other countries around the world. All else constant, increased oil sales for Russia would" increase Russian net exports and net capital outlfow decrease Russian net exports and net capital outflow "increase Russian net exports, but decrease net capital outflow" O "decrease Russian net exports, but increase net capital outlfow" 0000 QUESTION 17 "If the Canadian government runs a budget surplus, the Canadian dollar will" appeciate depreciate O remain at a constant value O be able to buy more foreign goods OOOO QUESTION 18 Economists believe that the classical dichotomy holds O in the long-run and the short-run O in the long-run but not the short-run in the short-run but not the long-run O not in the long-run and not in the short-run QUESTION 19 "If a central bank wants to contract the money supply, they will buy bonds in the open market." O True O False
Increased oil sales for Russia would increase Russian net exports but decrease net capital outflow. If the Canadian government runs a budget surplus, the Canadian dollar will appreciate. Economists believe that the classical dichotomy holds in the long-run but not the short-run. If a central bank wants to contract the money supply, they will buy bonds in the open market.
When Russia sells more oil to other countries, it will increase Russian net exports because it is exporting more goods. However, it will decrease net capital outflow because the increased revenue from oil sales will lead to a decrease in the need for borrowing or investments from other countries. If the Canadian government runs a budget surplus, it means that its revenue exceeds its expenditures. This will lead to a decrease in the supply of Canadian dollars in the market, creating a demand-supply imbalance and causing the Canadian dollar to appreciate.
Economists believe that the classical dichotomy holds in the long-run but not the short-run. The classical dichotomy suggests that changes in the money supply only affect nominal variables (such as prices and wages) in the long-run, while real variables (such as output and employment) are determined by factors such as technology and resource availability. In the short-run, changes in the money supply can have an impact on real variables due to price stickiness and other frictions.
If a central bank wants to contract the money supply, they will sell bonds in the open market, not buy them. By selling bonds, the central bank reduces the amount of money in circulation, leading to a contraction of the money supply. Therefore, the statement "If a central bank wants to contract the money supply, they will buy bonds in the open market" is false.
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Statement of Financial Position as at 31 December 2019 H S 1,000,000 500,000 Ordinary Share Capital Retained Profit 400,000 110,000 Current Liabilities 100,000 20,000 1,500,000 630,000 Land 100,000 100,000 450,000 400,000 Building at cost Accumulated Depreciation -50,000 -100,000 Other non-current assets 100,000 200,000 750,000 Investment in S- Ordinary shares at cost Current Assets 150,000 30,000 1,500,000 630,000 Additional Information : a) H acquired 400,000 of the 500,000 ordinary shares of S on 1 January 2019 when the retained profit of S has a credit balance of RM70,000. b) On the date of acquisition of S, the fair value of land of S was RM20,000 more than its carrying amount of RM100,000. Inventory of S had a fair value that was RM5,000 more than its carrying amount. As at the end of the current year, this inventory had been sold. c) As at 31 December 2019, the fair values of the land of H and S were RM130,000 and RM145,000 respectively. The group's policy is to measure all land at fair value. d) There was no purchase or sale of land in year 2019. Required: Prepare the consolidated statement of financial position of H and S as at 31 December 2019.
Consolidated statement of financial position of H and S as at 31 December 2019
Liabilities Amount (RM)Amount (RM)Share Capital Ordinary Share Capital 1,000,000500,000
Retained Profit H400,000S110,000510,000
Current Liabilities 100,00020,000
Total Liabilities 1,610,000530,000
Assets Non-Current Assets Land (H)100,000
Land (S)145,000245,000
Building at cost 450,000
Accumulated Depreciation (-)50,000
Other non-current assets 100,000
Investment in S- Ordinary shares at cost 400,0001,145,000
Current Assets Inventory 30,000
Cash in hand 230,000
Receivables 205,000
Total Assets 1,580,000
Consolidated Current Ratio = 1,015,000 / 100,000
= 10.15:1
Calculation of Goodwill = Purchase Consideration - Acquiree's Net Assets
Purchase Consideration = Cost of investment in S ordinary shares + Acquisition cost
= RM 400,000 + 20,000
= RM 420,000
Acquiree's net assets = Ordinary Share Capital + Retained Profit + Current Liabilities+ Property Plant and Equipment – Accumulated Depreciation
= RM 500,000 + RM 110,000 + RM 20,000 + RM 450,000 - RM 100,000
= RM 980,000 Goodwill
= RM 420,000 - RM 980,000
= (-) RM 560,000 (eliminated on consolidation)
Consolidated Statement of Comprehensive Income for the year ended 31 December 2019 RM RM Revenue 2,800,000 Less:
Cost of sales 1,750,000 Gross profit 1,050,000
Add: Investment income 10,000 1,060,000
Less: Operating expenses 750,000 Profit before tax 310,000
Add: Share of associate's profit 18,000
Less: Gain on fair value of land (15,000) Profit before tax 313,000
Less: Tax expense 63,000 Profit for the year 250,000 Workings Consolidated inventories= Inventories H + Inventories S= RM 20,000 + RM 10,000 + RM 5,000= RM 35,000
Consolidated current assets= Cash in hand H + Cash in hand S
= RM 200,000 + RM 30,000
= RM 230,000
Consolidated receivables = Receivables H + Receivables S
= RM 100,000 + RM 105,000
= RM 205,000
Consolidated cost of sales = Cost of sales H + Cost of sales S
= RM 1,250,000 + RM 500,000
= RM 1,750,000
Calculation of Consolidated Operating Profit= Gross profit – Operating expenses
= RM 1,060,000 – RM 750,000
= RM 310,000
Calculation of Consolidated Profit before Tax= Profit before tax H + Profit before tax
S= RM 100,000 + RM 213,000
= RM 313,000
Calculation of Consolidated Tax Expense= Consolidated Profit before Tax * 20%
= RM 313,000 * 20%
= RM 63,000
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Comment about these answers.
1. Explain the concepts related to social responsibility and how a company's ethics support and determine its position on social responsibility.
The concepts of social responsibility explains the way managers and employees of a company view their duty to make decisions to protect, enhance, and promote for the well being of stakeholders. Any kind of decisions will reflect the aspects of a company. A company's decision on business is broken down to four factors; occupational, individual, societal, and organizational ethics. Societal ethics are standards on how members of a society are govern involving issues like fairness, justice, poverty, and rights of an individual. Occupational ethics contain how members are govern on a profession, trade, or craft on performing work-related activities. Individual ethics are personal standards to determine how people view their responsibilites and how they act on it. Lastly, organizational ethics are the practices and beliefs a company view their responsibility to their stakeholders.
2. Discuss how this company implements the One-for-One Giving model as a social responsible act.
Bombas' One-for-One method is a good example of social responsibility since the company decided to donate a pair of socks for every purchase. The decision of Bombas to donate a pair of socks after each purchase was a mission-based market decision. Goldberg and Heath found a cause in homelessness and donated socks to homeless shelters after knowing socks are the number one requested item. Within this decision that impacts the community, customers would continue purchasing their product because of this cause.
3. Explain the four main approaches toward social responsibility (obstructionist, defensive, accommodative, and proactive) and determine whoch approach Bombas implements. Explain why you chose the approach. Include rationales from the course textbook and the Case Study article to support your choice.
The four different approach of social responsibility are known as obstructionist, defensive, accommodative, and proactive. Obstructionist are companies and mamagers choosing not to behave in an illegal and unethical way instead of socially responsible one. Defensive approach is to behave ethically to stay within the law and strictly abide by legal requirements. The accommodative approach is the legal and ethical behavior to try and balance the interests of different stakeholders as the need arises. Proactive approach is actively embracing the social responsibility to learn the needs of different stakeholders and using resources to promote their interests. Bombas went with the proactive approach since they learn their products can help their community and helps their customers feel good about their purchases.
4. Discuss how has social media contributed to this company's success as a competitive advantage. Provide examples from the Case Study article.
Social media has contributed to Bombas' success by encouraging their customers to post their purchases online. Customers can post their socks with the hashtag #BeeBetter, allowing them to contribute their involvement with their mission. The more customers promote their products on social media, the more success One-for-One model will gain with more exposure.
1. The answer provided correctly explains the concepts of social responsibility.
2. The answer accurately explains how Bombas has implemented the One-for-One Giving model as a socially responsible act.
3. The answer explains the four main approaches toward social responsibility and successfully identifies the approach adopted by Bombas.
4. The answer provides a clear explanation of how social media has contributed to Bombas' success.
1. The answer provided correctly explains the concepts of social responsibility. The different factors affecting a company's decision-making process are well defined.
2. The answer accurately explains how Bombas has implemented the One-for-One Giving model as a socially responsible act. The reason behind choosing socks as a donation item is also mentioned.
3. The answer explains the four main approaches toward social responsibility and successfully identifies the approach adopted by Bombas. The reason behind the choice of approach is also well explained.
4. The answer provides a clear explanation of how social media has contributed to Bombas' success. The example provided is relevant and supports the answer.
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Maria works for a restaurant as a waitress. The following illustrates Maria's employment rent. If Maria loses her job, her government provides an unemployment benefit for up to 20 weeks. what Maria gets should she not lose her job today --what Maria gets should she lose her job today Hourly wage - $12 Maria's rent when employed Employment rent per hour Unemployment benefit plus the disutility of effort-$8 Disutility of effort when employed Unemployment benefit-56 Reservation wage per hour What Maria receives in unemployment benefit during her period of unemployment Number of 35-hour weeks Expected duration of unemployment 4 weeks Which of the following statements correctly explains the diagram above? O a. Maria is not enjoying any employment rent because she is able to find a new job in four weeks. O b. Maria's total unemployment rent is $24. Oc Maria's employment rent will be reduced in the situation where the unemployment rate is higher. Od: Maria's employment rent will be higher if the unemployment benefit is higher. Oe. This model does not account for certain costs involved in employment such as commuting costs. Hourly wages (S)
The correct option that explains the diagram above is - Maria's employment rent will be higher if the unemployment benefit is higher.
This statement correctly explains the given diagram. A detailed answer is provided below. According to the given data, Maria works as a waitress for a restaurant and earns an hourly wage of $12. Maria's employment rent is given as the difference between the maximum wage that Maria would accept for any job and the wage that Maria is currently earning in her present job. Maria's reservation wage is the minimum wage that Maria would be willing to accept in any job. The amount that Maria gets should she not lose her job today is equal to her hourly wage, which is $12. In the case of Maria losing her job, the government provides her an unemployment benefit for up to 20 weeks.
In this scenario, if Maria loses her job, she would receive $8 in disutility of effort and $56 in unemployment benefits per hour. The employment rent per hour can be calculated as follows: Reservation wage per hour = Disutility of effort when employed + Maximum unemployment benefit per hour Reservation wage per hour = $8 + $56Reservation wage per hour = $64Employment rent per hour = Reservation wage per hour - Hourly wage Employment rent per hour = $64 - $12Employment rent per hour = $52
Therefore, Maria's employment rent per hour is $52.In the given scenario, Maria's expected duration of unemployment is 4 weeks and the number of 35-hour weeks is also 4 weeks. So, Maria will receive an unemployment benefit of $56 × 35 × 4 = $7,840.What Maria receives in unemployment benefits during her period of unemployment is $7,840.The correct option that explains the diagram above is - Maria's employment rent will be higher if the unemployment benefit is higher.
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Which is/are a method/s of financial analysis for capital budgeting purposes? a. Calculations of internal rate of return and relative value unit (RVU) b. Calculation of cost-drivers O Calculation of internal rate of return and cost-drivers
c. Calculations of internal rate of return and payback period d. Development of a relative value unit (RVU)
Which is/are a method/s of financial analysis for capital budgeting purposes. The correct answer is:
c. Calculations of internal rate of return and payback period
Financial analysis plays a crucial role in capital budgeting, which involves evaluating and selecting investment projects. The methods used in financial analysis help assess the feasibility and profitability of potential projects. Among the options provided, calculations of internal rate of return (IRR) and payback period are commonly used methods for capital budgeting purposes.
1. Internal Rate of Return (IRR): IRR is a financial metric used to assess the profitability of an investment project. It calculates the discount rate at which the net present value (NPV) of cash flows from the project becomes zero. The IRR represents the rate of return that the project is expected to generate. In capital budgeting, projects with higher IRRs are generally preferred as they offer greater returns.
2. Payback Period: The payback period is a simple method that determines the time required to recoup the initial investment in a project. It calculates the period it takes for the cumulative cash inflows from the project to equal or surpass the initial investment. The payback period provides a measure of the project's risk and liquidity, with shorter payback periods indicating faster recovery of the investment.
While other financial metrics such as cost-drivers and relative value units (RVUs) can be relevant in certain contexts, they are not typically used as direct methods of financial analysis for capital budgeting purposes. Cost-drivers are used to analyze the factors influencing the costs of a project, while RVUs are a measure of relative value used in certain industries, such as healthcare.
In summary, when it comes to financial analysis for capital budgeting purposes, the calculations of internal rate of return (IRR) and payback period are commonly employed methods. These metrics help assess the profitability, risk, and liquidity of investment projects, assisting decision-makers in evaluating and selecting the most viable options.
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What life events or challenges can make it difficult to
prioritize volunteering?
Life events or challenges such as demanding work schedules, family responsibilities, health issues, and personal financial constraints can make it difficult to prioritize volunteering.
Volunteering requires time and commitment, and certain life events or challenges can create obstacles that make it challenging to prioritize volunteering. Demanding work schedules, especially in high-pressure jobs or during busy periods, can leave individuals with limited time and energy to engage in volunteer activities.
Family responsibilities, such as taking care of young children, elderly parents, or managing household tasks, can also consume a significant amount of time and make it difficult to allocate time for volunteering. Health issues, whether personal or within the family, may require individuals to focus on their own well-being or caregiving responsibilities, leaving little room for volunteering.
Additionally, financial constraints can limit the resources available for travel or participation in volunteer programs that may require expenses. These various life events and challenges can significantly impact an individual's ability to prioritize volunteering, despite their willingness and desire to contribute to their community or a cause.
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Test your understanding 3 MaxCo owns a fish finger factory. The premises were purchased on 1 January 20X1 for $450,000 and depreciation charged at 2% pa on a straight-line basis. MaxCo now wishes to revalue the factory premises to $800,000 on 1 January 20X7 to reflect its market value. What is the balance on the revaluation surplus account after accounting for this transaction? A $350,000 B $395,000 с $404,000 D $413,000
Revaluation surplus is an accounting term used to describe a balance sheet's surplus created as a result of a rise in a fixed asset's value beyond the carrying amount. The correct answer is option c.
It is also referred to as an equity account and is displayed beneath the retained earnings category in the balance sheet. The revaluation surplus is calculated as follows:
Revaluation surplus = Net fair value of assets – Carrying amount of assets Max Co owns a fish finger factory. The premises were purchased on 1 January 20X1 for $450,000 and depreciation was charged at 2% pa on a straight-line basis. MaxCo now wishes to revalue the factory premises to $800,000 on 1 January 20X7 to reflect its market value. To calculate the revaluation surplus balance, we need to follow these steps:
Step 1: Calculate the depreciation charge for the years prior to revaluation= 2% * $450,000 = $9,000 per annum. For the six years prior to the revaluation, the total depreciation charge is $54,000.
Step 2: Find the carrying value of the factory premises before revaluation= Cost – Accumulated depreciation= $450,000 – $54,000= $396,000
Step 3: Calculate the net increase in the value of the factory premises= Revalued amount – Carrying amount= $800,000 – $396,000= $404,000
Step 4: Record the revaluation surplus account= Net fair value of assets – Carrying amount of assets= $404,000 – $0 (as there is no fair value for the building before the revaluation)= $404,000.
Therefore, the balance on the revaluation surplus account after accounting for this transaction is option C: $404,000.
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