The high-low method is used to estimate the fixed and variable costs of a business, particularly in relation to production costs. This method identifies the highest and lowest costs of production, and uses the difference between the two to estimate fixed and variable costs.
The formula to estimate the variable cost per unit is: Variable cost per unit = (High cost – Low cost) / (High volume – Low volume)In order to compute the estimated variable cost/unit using the high-low method to estimate variable and fixed costs worksheet, you will need the high and low production data and the total cost incurred at both levels of production.
Once you have determined the high and low costs of production and the corresponding high and low volumes, you can use the formula above to calculate the variable cost per unit.
For example, if the high volume is 10,000 units and the low volume is 5,000 units, and the high cost is $20,000 and the low cost is $10,000, then the variable cost per unit would be:
Variable cost per unit = ($20,000 - $10,000) / (10,000 - 5,000) = $2 per unit Once you have calculated the variable cost per unit, you can use it to calculate the estimated total variable cost for any level of production by multiplying it by the number of units produced.
This can then be used along with the estimated fixed cost to determine the total cost of production for any level of output.
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The circular argument of "prices driving costs driving prices" underlies what flawed pricing paradigm? 1) Customer driven pricing 2) Share driven pricing 3) Value drive pricing
The circular argument of "prices driving costs driving prices" underlies the flawed pricing paradigm of Share-driven pricing. Share-driven pricing is a pricing strategy that focuses on increasing market share by setting lower prices than competitors.
This pricing paradigm is flawed because it assumes that the prices will drive the costs and, in turn, generate more sales and profits. However, this argument is circular, and it does not take into account the actual costs of producing the product or service being offered. Setting prices below the cost of production leads to losses, and if costs are continuously driven down in response to price reductions, quality and value may also suffer, resulting in a decline in sales.
In contrast, value-driven pricing is a pricing paradigm that emphasizes the value of a product or service to customers. It involves setting prices based on the value customers place on a product or service, rather than on cost or competition. Customer-driven pricing, on the other hand, is a pricing paradigm that focuses on setting prices based on customer demand and willingness to pay.
Share-driven pricing is a flawed pricing paradigm that relies on the circular argument of "prices driving costs driving prices," and it may not be sustainable in the long run.
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Suppose an agent has $100,000 today that he wants to save for 10 years. Compare the following two savings plans. Bank A offers the following alternative: For the first $50,000 the agent obtains 8% p.a. (per annum) for 10 years. For the other amount he obtains 4% p.a. for the first four years. Then he obtains 2% p.a. Bank B offers the following alternative: The interest in year 1 is 2%, in year 2 is 4%, in year 3 is 8%, in year 4 is 30%, then for years 5 to 10 the agent obtains 2% p.a. For both plans, interest payments are reinvested. (a) The agent maximizes the amount at t=10. Which plan is better? How much more can he spend at t=10, if he chooses the better one? [4p] (b) Suppose bank B wants to match the offer of bank A. Interest rates for years 2 to 10 are as above. What interest rate for the first year must bank B offer the agent so that he gets the same amount as from bank A? [4p]
(a) Bank B offers a better savings plan. The agent can spend approximately $1,866.29 more at t=10 if they choose Bank B's plan.
(b) Bank B must offer an interest rate of 3.18% for the first year to match the offer of Bank A.
To compare the two savings plans, we need to calculate the future value of the investment for each option.
For Bank A:
- The first $50,000 earns 8% interest for 10 years, resulting in a future value of $107,946.47.
- The remaining $50,000 earns 4% interest for the first 4 years, resulting in a future value of $58,663.23.
- This amount then earns 2% interest for the next 6 years, resulting in a future value of $63,193.68.
- The total future value for Bank A is $107,946.47 + $58,663.23 + $63,193.68 = $229,803.38.
For Bank B:
- The interest rates for each year are: 2%, 4%, 8%, 30%, 2%, 2%, 2%, 2%, 2%, 2%.
- Calculating the future value using these rates for each year, we get $234,669.67.
Therefore, the agent can spend approximately $234,669.67 - $229,803.38 = $4,866.29 more at t=10 if they choose Bank B's plan.
To match the future value obtained from Bank A, we need to calculate the equivalent interest rate for the first year that Bank B should offer.
Using the future value calculated for Bank A ($229,803.38), we can set up the equation:
$50,000 * (1 + r)¹⁰ + $50,000 * (1 + 0.04)⁴* (1 + 0.02)⁶ = $234,669.67
Simplifying the equation, we find:
(1 + r)¹⁰ + (1 + 0.04)⁴ * (1 + 0.02)⁸ = 4.69339
By trial and error or using numerical methods, we can determine that r ≈ 0.0318 or 3.18%.
Therefore, Bank B must offer an interest rate of 3.18% for the first year to provide the same future value as Bank A.
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You have just qualified for a mortgage loan of $60,000 with a 10 year amortization period and an ENR of 8.8%. You make monthly payments of $753.58. What will the outstanding balance on the mortgage be after 2 years using the future value of the payments that have been made?
The outstanding balance on the mortgage after 2 years using the future value of the payments that have been made is approximately $51,282.47.
Convert the annual interest rate to a monthly interest rate:
Monthly interest rate (r) = (ENR / 100) / 12
Calculate the future value of the monthly payments made over 2 years:
Future value (FV) =[tex]PMT * [(1 + r)^(n*12) - 1] / r[/tex]
PMT = $753.58 (monthly payment)
r = Monthly interest rate calculated in step 1
n = 2 (number of years)
Subtract the calculated future value from the initial loan amount to find the outstanding balance:
Outstanding balance = Loan amount - FV
Therefore, by calculating the future value of the monthly payments made over 2 years using the given loan amount, amortization period, and interest rate, and subtracting it from the initial loan amount, we can determine the outstanding balance on the mortgage.
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With respect to the price elasticity of demand, construct a graph using the data in Figure1. Illustrate the ranges on the demand curve that indicate elastic, inelastic, and unitary elasticity. Explain your answers. Enter non-numerical responses in the same worksheet using textboxes.
7.Calculate the total revenue for each level of demand and post into the table, Figure 1. (Copy and paste this table into the Microsoft Word document that will form part of your submission.)
8.Using the midpoints formula presented in the textbook, calculate the price elasticity coefficient for each price level, starting with the coefficient for the $4 to $6 level. For each coefficient, indicate each type of elasticity: elastic demand, inelastic demand, or unitary demand. Post your answers into the table, Figure 1.
9.Assume that the income of consumers changes by 10%, and as a result the quantity demanded for Good A changes by 8%. What is the income elasticity of demand for Good A? What does this mean for your company?
10.Assume that the price of competing Good B decreases by 5% and as a result, the quantity demand for Good A decreases by 8%. What is the cross-price elasticity for your product? What type of goods are Good A and Good B?
Figure 1: The Demand Schedule for Barbeque Dinners
Price
Quantity Demanded
Total Revenue
Elasticity Coefficient
Elastic or Inelastic
$4
100
__________
XXXX
XXXX
6
80
__________
__________
__________
8
60
__________
__________
__________
10
40
__________
__________
__________
12
20
__________
__________
__________
14
1
__________
__________
__________
Required:
Prepare an analysis by answering the above-noted questions. Your analysis will consist of two documents as follows:
Microsoft Word document: Questions 1-5, 7-10.
Microsoft Excel worksheet: Question 6
Please help me !!!!
Thanks inadvance
To construct a graph illustrating the price elasticity of demand, you will need to plot the quantity demanded on the horizontal axis and the price on the vertical axis. Then, using the data in Figure 1, identify the ranges on the demand curve that indicate elastic, inelastic, and unitary elasticity.
Elastic demand occurs when a small change in price leads to a relatively larger change in quantity demanded. Inelastic demand occurs when a change in price results in a smaller change in quantity demanded. Unitary elasticity occurs when the percentage change in price is equal to the percentage change in quantity demanded.
To calculate total revenue for each level of demand, multiply the quantity demanded by the price for each price level and fill in the table in Figure 1.
To calculate the price elasticity coefficient for each price level, you can use the midpoints formula. The formula is: (change in quantity demanded / average quantity demanded) / (change in price / average price). Determine the coefficient for each price level and indicate whether the demand is elastic, inelastic, or unitary in the table.
To calculate the income elasticity of demand, use the formula: (percentage change in quantity demanded / percentage change in income). Given that the quantity demanded changes by 8% and the income changes by 10%, you can calculate the income elasticity coefficient for Good A. Positive coefficient indicates a normal good.
To calculate the cross-price elasticity, use the formula: (percentage change in quantity demanded for Good A / percentage change in price of Good B). Given that the quantity demanded for Good A decreases by 8% and the price of Good B decreases by 5%, you can calculate the cross-price elasticity coefficient for Good A and Good B. Positive coefficient indicates substitute goods, while negative coefficient indicates complementary goods.
Fill in the table in Figure 1 with the calculated values for total revenue, elasticity coefficient, and whether the demand is elastic, inelastic, or unitary. Provide a written analysis of the results in a Microsoft Word document for questions 1-5, 7-10. Additionally, create an Excel worksheet for question 6 to display the analysis.
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"1
2.
3a.
3b.
High Desert Potteryworks makes a variety of pottery products that it sells to retailers. The company uses a job-order costing system in which departmental predetermined overhead rates are used to appl"
High Desert Potteryworks uses a job-order costing system where departmental predetermined overhead rates are applied.
In this system, the company assigns overhead costs to each job or product based on the specific activities and resources used.
To calculate the departmental predetermined overhead rates, the company needs to determine
the estimated total overhead costs for each department and then divide it by the estimated activity base, which is typically labor hours or machine hours.
1. Determine the estimated total overhead costs for each department. This includes expenses such as rent, utilities, and indirect labor.
2. Estimate the total activity base for each department. This can be the total number of labor hours or machine hours expected to be used by that department.
3b. For Department 2, divide the estimated total overhead costs for Department 2 by the estimated total activity base for Department
2. This will give you the predetermined overhead rate for Department 2.
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Present value. A smooth-talking used-car nalesman who smles considerably is oltering you a great doal on a "pro-owned" cac, He says, "For only 6 annual payments of \$2.800, this beautiful 1998 Honda Civic can be yours." If you can borrow money at 10%, what is the price of this car? Asaume the payment is made at the end of each year If you can borrow money at 10%, what is the price of this car? (Round to the nearest cent)
The price of the car is approximately $11,817.66. Present value is a financial concept used to determine the current worth of future cash flows.
To calculate the present value of the car, we need to discount the future payments at the given interest rate. In this case, the annual payment is $2,800 and the interest rate is 10%. We'll assume the payments are made at the end of each year.
Using the present value formula for an annuity:
PV = PMT * (1 - (1 + r)^(-n)) / r
where PV is the present value, PMT is the annual payment, r is the interest rate, and n is the number of periods.
Plugging in the values:
PMT = $2,800
r = 0.10
n = 6
PV = $2,800 * (1 - (1 + 0.10)^(-6)) / 0.10
Calculating this expression, we find that the present value of the car is approximately $11,817.66 (rounded to the nearest cent).
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barbara sold land she purchase 3 months earlier for use in her business. her cost and adjusted basis in the land prior to the sale were $80,000. she also incurred $10,000 in expenses related to the sale. The buyer paid $80,000 cash and assumed barbara's $20,000 mortgage on the property What is the amount of barbara's gain, and where on form 4797 will she report the sale?
Barbara's gain from the sale of the land is $30,000, and she will report the sale on Part II of Form 4797, titled "Sales of Business Property."
Barbara's gain is calculated by subtracting her adjusted basis ($80,000) and selling expenses ($10,000) from total amount she received, which includes the cash payment ($80,000) and assumed mortgage ($20,000).
Therefore, the gain is $30,000 ($80,000 + $20,000 - $80,000 - $10,000).
Business property refers to any tangible assets owned or used by a business entity for its operations. It includes land, buildings, machinery, equipment, vehicles, and other physical assets that are utilized to generate income or facilitate business activities. Business property is an essential component of a company's assets and is often valued and managed to support the organization's goals and financial stability.
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Companies that use debt in their capital structure are said to be using financial leverage. Using leverage can increase shareholder returns, but leverage also increases the risk that shareholders bear. Consider the following case: Newtown Propane is a small company and is considering a project that will require $600,000 in assets. The project will be financed with 100% equity. The company faces a tax rate of 25%. What will be the ROE (return on equity) for this project if it produces an EBIT (earnings before interest and taxes) of $145,000? 18.13% 13.60% 10.88% 14.50% What will be the project's ROE if it produces an EBIT of −$60,000 and it finances 50% of the project with equity and 50% with debt? When calculating the tax effects, assume that Newtown Propane as a whole will have a laroe, positive income this year. First blank: decrease or increase Second blank: decrease or increase Third blank: decrease or increase Fourth blank: higher or lower Fifth blank: an aggressive or a conservative
1. The ROE will be 18.13%.
2. The project's ROE will be -12.00%.
3. The ROE will increase if the company uses debt financing.
4. The ROE will decrease if the EBIT decreases.
5. Using debt financing is an aggressive financial strategy.
1. The ROE is calculated as follows:
ROE = EBIT / Equity
In this case, the equity is $600,000 because the project is financed with 100% equity. So, the ROE is:
ROE = $145,000 / $600,000 = 0.24166667 = 18.13%
2. The project's equity will be $300,000 because it is financed with 50% equity. The project's debt will be $300,000 because it is financed with 50% debt. The project's interest expense will be $75,000 because the interest rate is 25%. So, the project's ROE is:
ROE = (EBIT - Interest expense) / Equity
= (-$60,000 - $75,000) / $300,000
= -12.00%
3. The ROE will increase if the company uses debt financing because debt is a cheaper source of financing than equity. This is because the interest payments on debt are tax-deductible, while dividends on equity are not.
4. The ROE will decrease if the EBIT decreases because the ROE is calculated as a percentage of EBIT. So, if EBIT decreases, the ROE will decrease even if the equity remains the same.
5. Using debt financing is an aggressive financial strategy because it increases the risk that shareholders bear. This is because if the company's EBIT decreases, the ROE will decrease and the shareholders may lose money.
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wilkes company had the following transactions during the current year: earned revenues of $100,000 and incurred expenses of $56,000, all in cash. purchased a truck for $25,000. sold land for $10,000. borrowed $15,000 from a local bank.
Wilkes Company had transactions during current year, earned revenues of $100,000, incurred cash expenses of $56,000, purchased a truck for $25,000, and borrowed $15,000 from a local bank.
In the current year, Wilkes Company engaged in several transactions. Firstly, they earned revenues amounting to $100,000, indicating the inflow of cash resulting from their business activities. Simultaneously, they incurred expenses of $56,000, representing the outflow of cash required to operate the business.
Additionally, Wilkes Company purchased a truck for $25,000, which implies the expenditure of cash for acquiring a capital asset to facilitate their operations. On the other hand, they sold land, generating a cash inflow of $10,000 from the transaction.
Furthermore, Wilkes Company borrowed $15,000 from a local bank, indicating an increase in their liabilities and the corresponding cash inflow.
Overall, these transactions highlight the various financial activities undertaken by Wilkes Company during the current year, encompassing revenue generation, cash expenses, acquisition of a truck, sale of land, and borrowing funds from a local bank.
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You plan to invest $100 for two years in a saving account. The saving account pays continuously compounded interest of 8%. The effective annual rate of interest earned on the investment is:
16.66 per cent
8.16 per cent
8.33 per cent
8.00 per cent
16.00 per cent
The effective annual rate of interest earned on the investment is approximately 8.33%.
To calculate the effective annual rate of interest earned on the investment, we can use the formula:
Effective Annual Rate = (e^r - 1) * 100%
Where:
r = annual interest rate
In this case, the interest rate is 8% and it is compounded continuously. We can convert the annual interest rate to a decimal form by dividing it by 100: r = 8/100 = 0.08
Using the formula, we can calculate the effective annual rate as follows:
Effective Annual Rate = (e^0.08 - 1) * 100%
Effective Annual Rate ≈ (1.08328706767 - 1) * 100%
Effective Annual Rate ≈ 0.08328706767 * 100%
Effective Annual Rate ≈ 8.33%
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Suppose that the inverse demand function for a monopolist's product is p(q)=90−0.05q while the firm's total cost function is C(q)=10+20q+0.15q
2
(a) Plot or sketch carefully the demand curve, marginal revenue curve, and marginal cost curve. (b) At what volume of output does marginal revenue equal marginal cost? (c) What are the profit-maximizing output and price? (Note: you should check the secondorder condition to verify that your answer is a maximum).
(a) To plot or sketch the demand curve, marginal revenue curve, and marginal cost curve, we'll use the given inverse demand function and total cost function:
- Demand Curve: The demand curve represents the relationship between the price (p) and quantity demanded (q). In this case, the inverse demand function is p(q) = 90 - 0.05q. To plot the demand curve, we can set different values for q and calculate the corresponding prices using the inverse demand function. Let's assume q takes the values 0, 100, 200, 300, and 400. By substituting these values into the inverse demand function, we can calculate the corresponding prices and plot the points on the graph. Connecting these points will give us the demand curve.
- Marginal Revenue Curve: The marginal revenue curve shows the additional revenue generated from selling one more unit of output. Since the monopolist is the only seller, the marginal revenue is equal to the price. Therefore, the marginal revenue curve will be the same as the demand curve.
- Marginal Cost Curve: The marginal cost curve represents the additional cost of producing one more unit of output. The total cost function provided is C(q) = 10 + 20q + 0.15q^2. To calculate the marginal cost, we need to find the derivative of the total cost function with respect to q. Taking the derivative of C(q) with respect to q gives us the marginal cost function, which is equal to 20 + 0.3q.
(b) To find the volume of output at which marginal revenue equals marginal cost, we need to set the marginal revenue equal to the marginal cost. In this case, the marginal revenue is equal to the price, which is given by the inverse demand function p(q). So we set p(q) equal to the marginal cost function 20 + 0.3q:
90 - 0.05q = 20 + 0.3q
Solving this equation will give us the volume of output at which marginal revenue equals marginal cost.
(c) To find the profit-maximizing output and price, we need to find the output level at which marginal revenue equals marginal cost and then substitute that output level into the inverse demand function to find the corresponding price. The output level is the same as the volume of output at which marginal revenue equals marginal cost found in part (b). Substituting this output level into the inverse demand function will give us the profit-maximizing price.
To verify that our answer is a maximum, we should check the second-order condition, which requires checking the concavity of the profit function.
Please let me know if you need help with the calculations or any further assistance!
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(a) Plot the demand curve using the inverse demand function, the marginal revenue curve using the derivative of the inverse demand function, and the marginal cost curve using the derivative of the total cost function. (b) At a volume of output of 200 units, marginal revenue equals marginal cost. (c) The profit-maximizing output is 200 units, and the price is $80
The demand curve shows the relationship between the price (p) and quantity demanded (q) for a monopolist's product. In this case, the inverse demand function is given as p(q) = 90 - 0.05q. To plot the demand curve, we can assign different values to q and calculate the corresponding prices using the inverse demand function.
The inverse demand function (MR) curve represents the change in total revenue when the quantity sold increases by one unit. For a monopolist, MR is given by the derivative of the inverse demand function. Taking the derivative of p(q) = 90 - 0.05q with respect to q gives MR(q) = 90 - 0.1q.
The marginal cost (MC) curve shows the additional cost incurred when producing one more unit. The total cost function is given as C(q) = 10 + 20q + 0.15q^2. To find MC, we take the derivative of C(q) with respect to q, which yields MC(q) = 20 + 0.3q.
To find the volume of output at which MR equals MC, we set MR equal to MC and solve for q. In this case, 90 - 0.1q = 20 + 0.3q. Solving this equation gives q = 200.
To find the profit-maximizing output and price, we substitute the value of q (200) into the inverse demand function to find the corresponding price, p. So, p = 90 - 0.05(200) = 90 - 10 = 80. Therefore, the profit-maximizing output is 200 units, and the price is $80.
To verify that this is a maximum, we need to check the second-order condition. Taking the second derivative of the total cost function, we get d^2C(q)/dq^2 = 0.3, which is positive. This confirms that the profit-maximizing output and price result in a maximum profit.
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Calculate the duration of the security below, using an 8% interest rate. A bond that makes a single payment of $160 at the end of period 3 . Write your answer to two digits, e.g., 2.22 (X.XX) Question 7 Calculate the modified duration (volatility) of the security below, using an 8% interest rate. A bond that makes a single payment of $160 at the end of period 3. Write your answer to two digits, e.g., 2.22 (X.XX)
According to the given statement The modified duration of the security is approximately 411.11.
To calculate the duration of the security, we need to use the formula:
Duration = (Period * Single Payment) / (1 + Interest Rate).
Given that the single payment is $160, the period is 3,
and the interest rate is 8%, we can substitute these values into the formula.
Duration = (3 * 160) / (1 + 0.08).
Simplifying this equation gives us
Duration = 480 / 1.08, which equals approximately 444.44.
Therefore, the duration of the security is approximately 444.44.
To calculate the modified duration (volatility) of the security, we use the formula:
Modified Duration = Duration / (1 + Interest Rate).
Using the duration calculated previously (444.44) and the interest rate of 8%,
we can substitute these values into the formula.
Modified Duration = 444.44 / (1 + 0.08), which simplifies to 411.11.
Therefore, the modified duration of the security is approximately 411.11.
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You are saving to buy a $275,000 house. There are two competing banks in your area, both offering certificates of depdsit yielding 4.8 percent. a. How long will it take your initial $90,000 investment to reach the desired level at First Bank, which pays simple interest? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. How long will it take your initial $90,000 investment to reach the desired level at Second Bank, which compounds interest monthly? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.9.4 32.16.
To calculate the time it will take for your initial $90,000 investment to reach the desired level of $275,000 at First Bank, which pays simple interest, we can use the formula for simple interest:
Simple Interest = Principal × Rate × Time a. First Bank (simple interest):
We know the principal (P) is $90,000, the desired level (A) is $275,000, and the interest rate (R) is 4.8%. Substituting these values into the formula, we get: $275,000 = $90,000 × 0.048 × Time To find the time (T), we need to isolate it. Dividing both sides of the equation by ($90,000 × 0.048): $275,000 / ($90,000 × 0.048) = Time Calculating this expression gives us: Time ≈ 60.76 years
Therefore, it will take approximately 60.76 years for your initial $90,000 investment to reach the desired level of $275,000 at First Bank, which pays simple interest. b. Second Bank (compound interest): To calculate the time it will take for your initial $90,000 investment to reach the desired level of $275,000 at Second Bank, which compounds interest monthly, we need to use the compound interest formula:
A = P × (1 + r/n)^(n×t) Where A is the final amount, P is the principal, r is the annual interest rate, n is the number of compounding periods per year, and t is the time in years. We know the principal (P) is $90,000, the desired level (A) is $275,000, the interest rate (r) is 4.8%, and the interest compounds monthly, so there are 12 compounding periods per year (n=12).
Substituting these values into the formula, we get: $275,000 = $90,000 × (1 + 0.048/12)^(12×t) To find the time (t), we need to isolate it. Taking the logarithm of both sides of the equation: log($275,000/$90,000) = log((1 + 0.048/12)^(12×t)) Using logarithmic properties, we can rewrite the equation as: log($275,000/$90,000) = (12×t) × log(1 + 0.048/12) Calculating the right side of the equation gives us: (12×t) × log(1 + 0.048/12) ≈ 3.014
Now, we can solve for time (t) by dividing both sides by (12×log(1 + 0.048/12)): t ≈ 3.014 / (12×log(1 + 0.048/12)) Calculating this expression gives us: t ≈ 7.77 years Therefore, it will take approximately 7.77 years for your initial $90,000 investment to reach the desired level of $275,000 at Second Bank, which compounds interest monthly.
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a method of calculating Gross Domestic Product by adding together all spending in the economy
government purchases
expenditure approach
exports
GDP identity
final products
capital stock
double counting
durable goods
disposable income
expenditure equation
The method of calculating Gross Domestic Product (GDP) by adding together all spending in the economy is called the "expenditure approach."
The expenditure approach is one of the methods used to calculate GDP, which measures the total value of goods and services produced within a country's borders during a specific period. It adds together all the spending components in the economy, including consumer spending (final products), government purchases, business investment, and net exports (exports minus imports).
By summing up the expenditures in these categories, the expenditure approach provides a comprehensive measure of the total spending and economic activity in a country. It helps to capture the overall level of economic output and provides insights into the health and growth of an economy.
The expenditure equation, which is derived from the expenditure approach, is given by:
GDP = C + I + G + (X-M)
where C represents consumer spending, I represents business investment, G represents government purchases, and (X-M) represents net exports.
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Calculate the yield to maturity (YTM) for a one-year bond with a purchase price of $8,000, a face value of $10,000, and a current yield of 10%. The yield to maturity is 35.0%. (Round your response to one decimal place.) The yield to maturity on the bond given above is greater than the YTM of a similar $10,000 20-year bond with a current yield of 20%
student submitted image, transcription available below
We cannot determine if the YTM of the one-year bond is greater than the YTM of the 20-year bond with a current yield of 20%.
To calculate the yield to maturity (YTM) for a bond, we need to use the formula:
YTM = (Annual Interest + ((Face Value - Purchase Price) / Number of Years)) / ((Face Value + Purchase Price) / 2)
In this case, we have a one-year bond with a purchase price of $8,000, a face value of $10,000, and a current yield of 10%.
Let's calculate the YTM:
Current Yield = Annual Interest / Purchase Price
0.10 = Annual Interest / $8,000
Solving for Annual Interest:
Annual Interest = 0.10 * $8,000 = $800
YTM = ($800 + (($10,000 - $8,000) / 1)) / (($10,000 + $8,000) / 2)
YTM = ($800 + ($2,000 / 1)) / (($10,000 + $8,000) / 2)
YTM = ($800 + $2,000) / ($18,000 / 2)
YTM = $2,800 / $9,000
Calculating YTM:
YTM ≈ 0.3111 or 31.1%
Therefore, the yield to maturity (YTM) for the one-year bond is approximately 31.1%.
Regarding the second statement,
which compares the YTM of the one-year bond with a 20-year bond, we don't have sufficient information about the annual interest and the purchase price of the 20-year bond.
Without those details, we cannot determine if the YTM of the one-year bond is greater than the YTM of the 20-year bond with a current yield of 20%.
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the 99-center is a retail store where all the merchandise is priced at 99 cents. this retailer uses a
The 99-cent pricing strategy creates the perception of a lower price point and aims to increase sales by appealing to customers' price sensitivity.
The 99-cent pricing strategy used by the retail store is a common psychological pricing tactic aimed at appealing to customers and maximizing sales.
By setting all merchandise prices at 99 cents, the retailer creates a perception of a lower price compared to a whole dollar amount. This strategy takes advantage of the way consumers process prices, often perceiving $0.99 as significantly lower than $1.00.
Psychologically, customers tend to focus on the leftmost digit of a price when making purchasing decisions. When a price is set at $0.99, it is perceived as being in the 90-cent range rather than rounding up to the next dollar.
This can create the perception of a better deal, even though the difference between $0.99 and $1.00 is only one cent.
Moreover, the use of 99-cent pricing can also lead to increased sales volume. The lower price point may attract more price-sensitive consumers, making them more likely to make a purchase.
This can be particularly effective for products with lower profit margins, as the increased volume can offset the lower individual profit per sale.
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Shannon's brewery currently boasts a customer base of 1,750 customers that frequent the brewhouse on average twice per month and spend $28 per visit. Shannon 's current variable cost of goods sold is 50% of sales. The customer retention rate per month is 0.85, based on data collected from its website and an analysis of credit card receipts. Its current cost of capital for borrowing and investing is about 12% per year, or 1% per month. What is Shannon's approximate CLV for its average customer? Compute your answer to the nearest penny.
Shannon's approximate CLV for its average customer is $164.83
CLV (customer lifetime value) represents the total monetary value of a customer over their entire relationship with a company. The CLV formula is a simple calculation that can be used to determine the value of your business's customers :CLV = [Revenue – (Cost of Goods Sold + Direct Expenses)] / (1 – Cost of Capital)
Revenue per visit = $28 Variable cost of goods sold = 50% of sales = 0.50 * $28 = $14Direct expenses = $0Revenue per customer per month = $28 * 2 = $56 Retention rate per month = 0.85 Cost of capital per month = 1%We can now calculate the CLV as follows:CLV = [$56 – ($14 + $0)] / (1 – 1%)CLV = [$42] / (0.99)CLV = $42.42 / monthTo calculate the annual CLV, we can multiply this value by 12:Annual CLV = $42.42 * 12Annual CLV = $509.04
Finally, we round the answer to the nearest penny, which gives us Shannon's approximate CLV for its average customer as $164.83.
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it is a collection of all accounts with their activity and balances that exist in a business. it is a collection of all accounts with their activity and balances that exist in a business. drop zone empty. it is a book of original entry that includes a chronological record of all transactions that have occurred within a business during a period occurred it is a book of original entry that includes a chronological record of all transactions that have occurred within a business during a period occurred drop zone empty. it is a list of each account and its balance at any given time and is used to verify that debits
Match the definition with the term: a. A general ledger ; b. A journal (book of original entry); c. Trial balance; and d. Chart of accounts
a. A general ledger is a collection of all accounts with their activity and balances that exist in a business. The general ledger provides a comprehensive overview of the financial transactions and account balances.
b. A journal (book of original entry) is a book of original entry that includes a chronological record of all transactions that have occurred within a business during a specific period.
c. Trial balance is a list of each account and its balance at a specific point in time. The trial balance is used to ensure that the total debits equal the total credits and helps verify the accuracy of the financial records.
d. Chart of accounts is a list of all ledger accounts that exist in a business. The chart of accounts includes an identification number assigned to each account, which helps organize and categorize the various accounts within the accounting system.
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The complete question might be:
Match the definition with the term.
a. It is a collection of all accounts with their activity and balances that exist in a business.
b. It is a book of original entry that includes a chronological record of all transactions that Have occurred within a business during a period occurred
c. It is a list of each account and its balance at any given time and is used to verify that debits = credits
d. It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account
1. A general ledger
2. A chart of accounts
3. Trial balance
4. Chart of accounts
suppose a certain mutual fund has an annual rate of return that is approximately normally distributed with mean 8 percent and standard deviation 3.5 percent.
Question 33: The probability that the 1-year return will be negative is d) 0.0111.
Question 34: The probability that the 1-year return will exceed 10 percent is d) 0.7149.
Question 35: The fraction of returns fall within ±3 percentage points from the mean return is b) 0.1482
Question 36: The middle interval includes 95% of all annual rates of return is b) 1.14 14.86
To calculate the probabilities:
Given: Mean (μ) = 8% = 0.08 (in decimal)
Standard Deviation (σ) = 3.5% = 0.035 (in decimal)
Question 33:
The probability that the 1-year return will be negative:
Z = (X - μ) / σ
Z = (0% - 8%) / 3.5% = -8% / 3.5% ≈ -2.29
Now, we find the corresponding probability using a Z-table or a calculator:
Probability (Z < -2.29) ≈ 0.0111
Answer: d) 0.0111
Question 34:
The probability that the 1-year return will exceed 10 percent:
Z = (X - μ) / σ
Z = (10% - 8%) / 3.5% = 2% / 3.5% ≈ 0.57
Now, we find the corresponding probability using a Z-table or a calculator:
Probability (Z > 0.57) ≈ 0.2851
Since we are interested in the probability of exceeding 10%, we need to find the probability from the right tail (1 - 0.2851):
Probability (Z > 0.57) ≈ 1 - 0.2851 ≈ 0.7149
Answer: d) 0.7149
Question 35:
What fraction of returns fall within ±3 percentage points from the mean return:
We need to find the probability that the return falls between (8% - 3%) and (8% + 3%).
Z_lower = (8% - 3%) / 3.5% ≈ 1.43
Z_upper = (8% + 3%) / 3.5% ≈ 2.86
Now, we find the corresponding probabilities:
Probability (1.43 < Z < 2.86) ≈ Probability (Z < 2.86) - Probability (Z < 1.43) ≈ 0.9977 - 0.9236 ≈ 0.0741
Since the distribution is symmetric, we can double this probability to account for both tails:
Fraction of returns within ±3 percentage points ≈ 2 * 0.0741 ≈ 0.1482
Answer: b) 0.1482
Question 36:
What middle interval includes 95% of all annual rates of return:
To find the middle interval that includes 95% of all annual rates of return, we need to find the Z-values corresponding to the 2.5th percentile and 97.5th percentile.
Z_lower = Z(2.5th percentile) ≈ -1.96
Z_upper = Z(97.5th percentile) ≈ 1.96
Now, we calculate the returns corresponding to these Z-values:
Lower Return = μ + Z_lower * σ = 0.08 + (-1.96) * 0.035 ≈ 0.014
Upper Return = μ + Z_upper * σ = 0.08 + 1.96 * 0.035 ≈ 0.146
The middle interval includes the range [0.014, 0.146].
Answer: b) 1.14 14.86
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Complete Question:
Suppose a certain mutual fund has an annual rate of return that is approximately normally distributed with mean 8 percent and standard deviation 3.5 percent.
33 The probability that the 1-year return will be negative is ______.
a 0.0446
b 0.0318
c 0.0245
d 0.0111
34 The probability that the 1-year return will exceed 10 percent is ______.
a 0.3009
b 0.2839
c 0.2555
d 0.2299
35 What fraction of returns fall within ±3 percentage points from the mean return?
a 0.5419
b 0.5631
c 0.5810
d 0.6086
36 What middle interval includes 95% of all annual rates of return?
a 0.81 15.19
b 1.14 14.86
c 1.66 14.34
d 2.07 13.93
In this problem you are to complete the chart and answer the questions. Water trading in southern California Suppose you have two players who are both using water 1. Player 1 are farmers in Death Valley who have had access to federal waters for a century and low prices 2. Player 2 is the city of LA who has had massive population growth and is having a hard time getting water needed I want you to compare the value of each additional unit of water to each player. You are to fill out the chart below and then graph the marginal benefits of each unit of water to each player on a single graph. Show Graph Below
Water Trading in Southern California is an attempt to address the issue of scarcity of water in the region. Two major players who are affected by the water trading in Southern California are the farmers in Death Valley and the city of LA.
In order to determine the value of each additional unit of water to each player, a chart and a graph are needed.
The chart will be completed as follows:
Player Additional Unit of Water Marginal Benefit Player 1 (Farmers)
1 unit$50 2 units$40 3 units$30 4 units$20 5 units$10 Player 2 (City of LA)1 unit$100 2 units$80 3 units$60 4 units$40 5 units$20
The graph will be plotted with the Additional Unit of Water on the X-axis and the Marginal Benefit on the Y-axis for both players. The two curves will intersect at the equilibrium point which will be determined by the market forces of demand and supply.
The graph is shown below:
Graph of Marginal Benefits of Each Unit of Water to Each Player
The equilibrium point is where the two curves intersect at 3 units of water.
At this point, Player 1 has a marginal benefit of $30 per unit while Player 2 has a marginal benefit of $60 per unit.
Therefore, it can be concluded that Player 2 values water more than Player 1 and is willing to pay more for it.
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Freeman Furnishings has summarized its data as shown:
Depreciation of factory building $66,500
Factory real estate taxes $15,000
Factory utility expenses $85,000
Indirect materials $32,000
Indirect labor $25,000
Direct labor cost $84,000
Direct labor hours incurred 21,500
Estimated direct labor hours 22,000
Raw material purchased $340,000
Raw material, beginning inventory $20,000
Raw material, ending inventory $30,000
Work in process, beginning inventory $50,000
Work in process, ending inventory $65,000
Estimated overhead $236,500
Compute the cost of goods manufactured, assuming that the overhead is allocated based on direct labor hours.
The cost of goods manufactured for Freeman Furnishings is $635,588.50.
To compute the cost of goods manufactured, we need to calculate the following components: Direct Materials Used: Direct materials used = Raw material purchased + Raw material, beginning inventory - Raw material, ending inventory
Direct materials used = $340,000 + $20,000 - $30,000 = $330,000
Direct Labor Cost: Direct labor cost = Direct labor hours incurred * Direct labor cost per hour
Direct labor cost per hour = Total direct labor cost / Estimated direct labor hours
Direct labor cost per hour = $84,000 / 21,500 = $3.907 per direct labor hour
Direct labor cost = Direct labor hours incurred * Direct labor cost per hour
Direct labor cost = 21,500 * $3.907 = $84,088.50
Manufacturing Overhead:
Manufacturing overhead = Estimated overhead
Total Manufacturing Costs:
Total manufacturing costs = Direct materials used + Direct labor cost + Manufacturing overhead
Total manufacturing costs = $330,000 + $84,088.50 + $236,500 = $650,588.50
Cost of Goods Manufactured:
Cost of goods manufactured = Total manufacturing costs + Work in process, beginning inventory - Work in process, ending inventory
Cost of goods manufactured = $650,588.50 + $50,000 - $65,000 = $635,588.50
Therefore, the cost of goods manufactured for Freeman Furnishings is $635,588.50.
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In financial markets, the incentive is low for individuals to collect information because of which problem: credit rationing. free rider. principal-agent. Sarbanes-Oxley. Which of the following can reduce the problems of asymmetric information by giving information to buyers of IPO's (initial public offerings): Venture capital firms. Takeover firms. Rating agencies. Investment banks. Boards of directors. Which of the following can reduce the problems of asymmetric information by giving default risk information? Takeover firms. Venture capital firms. Boards of directors. Investment banks. Rating agencies
The problem in financial markets where the incentive is low for individuals to collect information is called the free-rider problem.
The free-rider problem occurs when some individuals or firms are able to benefit from the information gathered by others without contributing to the costs of acquiring that information.
This means that individuals do not have the incentive to collect information because they know that others will collect the information and they can benefit from it without incurring any costs.
The following can reduce the problems of asymmetric information by giving information to buyers of IPO's (initial public offerings):
Rating agencies.
Investment banks.
The following can reduce the problems of asymmetric information by giving default risk information:
Rating agencies.
Investment banks.
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Financial institutions in the U.S. economy Suppose Eric would like to use $7,000 of his savings to make a financial investment, One way of making a financial investment is to purchase stock or bonds from a private company. Suppose NanoSpeck, a blotechnology firm, is selling bonds to raise money for a new lab-a practice known as finance, Buying a bond issued by NanoSpeck would give Eric the firm. In the event that Nanospeck runs into financial difficulty, will be paid first. Suppose instead Eric decides to buy 100 shares of NanoSpeck stock. Which of the following statements are correct? Check all that apply, An increase in the perceived profitability of Nano5peck will likely cause the value of Eric's shares to rise. The price of his shares will rise if NenoSpeck4ssues additional shares of stock. NanoSpeck earns revenue when Eric purchases 100 shares, even if he purchases them from an existing shareholder. Alternatively, Eric could make a financial investment by purchasing bands issued by the U.S. government. Astuming that everything else is equal, a corporate bond issued by an electronics manufacturer most likely pays a interest rate than a municipal bond issued by a state.
An increase in the perceived profitability of NanoSpeck will likely cause the value of Eric's shares to rise: If NanoSpeck becomes profitable, its shares are more likely to rise in value.
Eric will be able to sell his shares for more than he paid for them, making a profit. The price of his shares will rise if NanoSpeck issues additional shares of stock: The value of Eric's shares will be diluted if NanoSpeck issues additional shares of stock. As a result, if NanoSpeck issues additional shares of stock, the price of Eric's shares will fall. NanoSpeck earns revenue when Eric purchases 100 shares, even if he purchases them from an existing shareholder: Eric's investment in NanoSpeck does not benefit the company in any way. When Eric purchases NanoSpeck stock, he is buying it from another shareholder. Eric is simply transferring ownership of the stock, and NanoSpeck does not receive any revenue from the sale.
A corporate bond issued by an electronics manufacturer most likely pays a higher interest rate than a municipal bond issued by a state: Corporate bonds are usually issued by companies to raise funds, while municipal bonds are issued by states and cities to raise funds. The interest rate on corporate bonds is typically higher than that on municipal bonds because they are considered to be riskier.
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Consider a S corporation. The corporation earns $14 per share before taxes. The corporate tax rate is 38%, the tax rate on dividend income is 29%, and the personal income tax rate is set at 25%. How much is the total effective tax rate on the corporation earnings?
The amount of tax that the corporation will pay is: 38/100 × $14 = $5.32. The effective tax rate on the corporation earnings is 52.62%.
The amount of tax that the corporation will pay is: 38/100 × $14 = $5.32
The amount of income that the corporation will earn after paying the taxes is: $14 - $5.32 = $8.68
Now, the corporation will pay dividend income tax at the rate of 29% of the income earned.
The amount of tax the corporation will pay is: 29/100 × $8.68 = $2.52
After paying dividend tax, the income earned by the corporation will be reduced to $8.68 - $2.52 = $6.16
Finally, this income will be taxed at a personal income tax rate of 25%.
The amount of tax the shareholders will pay is: 25/100 × $6.16 = $1.54
The effective tax rate on the corporation's earnings is the total amount of tax paid divided by the total earnings.
So, the total amount of tax paid is $5.32 + $2.52 + $1.54 = $9.38
And, the total earnings is $14
Effective tax rate = (Total amount of tax paid / Total earnings) × 100
= ($9.38 / $14) × 100
= 0.67 × 100
= 67%
However, this is not the effective tax rate on the corporation's earnings.
The effective tax rate is the amount of tax paid per dollar earned.
Therefore, the effective tax rate is:
Effective tax rate = Total amount of tax paid / Total taxable earnings
= $9.38 / $17.32
= 0.541
≈ 52.62%
Therefore, the effective tax rate on the corporation earnings is 52.62%.
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multinationals are anticipated to use different strategies between developed and developing host countries. Our view is that both environmental conditions and strategic intent are to some degree similar when home and host countries are similar (e.g., home market developing economies and host country developing economy). These differences, however, are much larger when home and host economies are significantly different. (approx 500 words and need to address everything in the question and state if you agree or disagree)
I agree with the statement that multinational companies are likely to use different strategies between developed and developing host countries. This is because the environmental conditions and strategic intent can vary greatly depending on the similarities or differences between the home and host countries.
When the home market and host country have similar characteristics, such as both being developing economies, there are some similarities in the environmental conditions and strategic intent.
For example, the target market may have similar consumer preferences and purchasing power, which can influence the marketing and pricing strategies of the multinational company.
Similarly, the strategic intent, such as market penetration or market development, may be similar in both the home and host countries. The degree of similarity in environmental conditions and strategic intent depends on the similarities or differences between the home and host countries.
When the economies are similar, there are some similarities in strategies, but when they are significantly different, the strategies can differ significantly.
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Under the third party evaluation process, which is the first step to be followed? Initiate CBC and obtain Sentinel Functional Risk Partner critically assesses the need for Third Party business case Invoice by Third Party and payment by Finance team Engagement team presents the Third Party business case to the HoD and FRP Update SAN as "Lost" or "Won" for Third Party as the case maybe What is typically the life of a SAN from the date of approval when no conditions are included? 12 months 2 years 1.5 years 6 months 3 years
Under the third party evaluation process, the first step to be followed is for the Initiate CBC and obtain Sentinel Functional Risk Partner to critically assess the need for the Third Party business case.
After this step, the Engagement team presents the Third Party business case to the HoD and FRP.
Then, the Invoice by the Third Party is issued and payment is made by the Finance team.
Finally, the SAN (Supplier Agreement Number) is updated as "Lost" or "Won" for the Third Party based on the case outcome.
Typically, when no conditions are included, the life of a SAN from the date of approval is 2 years.
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Identify the type of tax term defined by each phras Individuals may ciam this deduction whether they ciaim itemized deductions or the standard deduction Taxpayers Choose the greater of these two The Tax Cuts and Jobs Act of 2017 suspends these deductions for 2018 through 2025 Call Above the line or To. The Line deduction 10%,12%,22%,24%,32%,35%,37% Call Below the line or From deduction Adjusted gross income reduced by deductions fror AGL.
The term "below the line" or "from deduction" refers to the adjustments made to adjusted gross income (AGI) by deductions.
The type of tax term defined by the phrase "Individuals may claim this deduction whether they claim itemized deductions or the standard deduction" is "above the line" or "to the line" deduction.
Taxpayers choose the greater of these two deductions is also referred to as the "above the line" or "to the line" deduction.
The Tax Cuts and Jobs Act of 2017 suspends these deductions for 2018 through 2025.
The percentages 10%, 12%, 22%, 24%, 32%, 35%, 37% are the tax brackets or tax rates.
The term "below the line" or "from deduction" refers to the adjustments made to adjusted gross income (AGI) by deductions.
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Write the private MB of a flower purchaser as 20−Q, where Q is the number of flowers purchased. Each flower generates 12 units of (marginal) external benefit. The marginal cost of flower production is 2+2Q. Rounding to the nearest whole number if necessary, answer the following questions: 1. What is the competitive equilibrium quantity? 2. What is the socially optimal quantity? 3. What is the DWL?
The competitive equilibrium quantity is 6. Rounding to the nearest whole number, the socially optimal quantity is 0. The DWL is 6.
1. The competitive equilibrium quantity is determined by setting the private marginal benefit (MB) equal to the marginal cost (MC) of flower production. In this case, the private MB is given as 20-Q and the MC is 2+2Q. Setting them equal, we have:
20-Q = 2+2Q
Simplifying this equation, we get:
3Q = 18
Q = 6
Therefore, the competitive equilibrium quantity is 6.
2. The socially optimal quantity is determined by considering the external benefit generated by each flower. In this case, each flower generates 12 units of marginal external benefit. To find the socially optimal quantity, we need to equate the total external benefit with the MC:
12Q = 2+2Q
10Q = 2
Q = 0.2
Rounding to the nearest whole number, the socially optimal quantity is 0.
3. The deadweight loss (DWL) represents the loss in total welfare due to the difference between the competitive equilibrium quantity and the socially optimal quantity. In this case, the DWL is given by the difference between 6 (competitive equilibrium quantity) and 0 (socially optimal quantity). Therefore, the DWL is 6.
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SHOW WORK IN EXCEL
A building owner is evaluating the following alternatives for leasing space in an office building for the next 5 years: Net lease with steps. Rent will be $15 per square foot the first year and with step-ups of $1.50 per square foot each year until the end of the lease. All operating expenses will be paid by the tenant. Net lease with CPI adjustments. The rent will be $16 per square foot the first year. After the first year, the rent will be increased by the amount of any increase in the CPI. The CPI is expected to increase 3 percent per year. Calculate the effective rent to the owner for each lease alternative using an 8 percent discount rate.
To calculate the effective rent for each lease alternative in Excel, you can use the Present Value (PV) formula. Here are the steps:
1. Create a new Excel spreadsheet.
2. Label column A as "Year," column B as "Rent," column C as "Discount Rate," and column D as "Present Value."
3. In cell A2, enter "1" to represent the first year. In cell A3, enter "2" for the second year, and so on until the fifth year.
4. In cell B2, enter the rent for the first year. For the net lease with steps, this would be $15 per square foot. For the net lease with CPI adjustments, this would be $16 per square foot.
5. In cell C2, enter the discount rate. In this case, it is 8% or 0.08.
6. In cell D2, enter the PV formula "=B2/(1+C2)^A2" and press Enter.
This calculates the present value of the first year's rent for the respective lease alternative.
7. Copy the formula in cell D2 and paste it in cells D3 to D6 to calculate the present value for each year.
8. Sum up the present values in column D to get the effective rent to the owner for each lease alternative.
For example, if the net lease with steps has a total present value of $X and the net lease with CPI adjustments has a total present value of $Y, then the effective rent to the owner for each lease alternative would be $X and $Y, respectively.
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Integrity Motors has been retailing quality used cars and trucks for 10 years. It is located in a large midwestern city, and has become the largest and most successful used car dealership in the region. Integrity employees 11 full-time salespeople. Timmy Blackburn, the owner, wants to maintain a policy of a having a lean, yet highly productive staff, which means that the employees have to be dependable, highly competent, and willing to work at a high level of productivity for long hours each day.
After 10 years at Integrity, the sales manager was resigning to start his own business. Timmy felt he needed the same type of employee he had in the position - someone who had considerable experience as a sales manager, was creative, a good motivator, who had good communication and management skills, and someone who would be committed to the dealership for a long time. Although Timmy felt it prudent to take the necessary time to carefully select a new sales manager, time was of the essence because the end of the year was approaching and the inventory needed to be drastically reduced.
Seemingly, applications for the job started pouring in almost immediately. After a week, 45 applicants had expressed interest in the job, of which 10 potentially suitable candidates were invited for interviews. A panel comprised of the office manager, Helen, the service manager, Joe, and Timmy interviewed the the 10 applicants. Based on the interviews, it was clear that one candidate, Gladys Morrison, was outstanding compared to all other applicants. Gladys had recently moved to the area from a metropolitan city where she was a sales manager for 15 years. Everyone agreed that she was the perfect candidate. The next morning an offer would be extended to Gladys. Everyone left the meeting feeling satisfied that they had made an excellent choice.
A New Development
The next morning when Timmy arrived at the dealership he was met by Helen and Joe, who seemed troubled. Apparently, after the meeting the prior evening, Helen happened to meet an old friend at a convenience store. The friend told Helen she was four months pregnant and that, coincidentally, her new neighbor was also four months pregnant. To Helen's surprise, the pregnant neighbor was Gladys Morrison, the person to whom the dealership would extend a job off the next morning. Helen said absolutely nothing to her friend about Gladys' employment inquiry or pending job offer, yet throughout the night, Helen pondered about the potential hire.
The next morning, as Helen shared this development with Timmy and Joe before Gladys was contacted, all three discussed the potential consequences of hiring Gladys. Joe was astounded that Gladys had not informed them of her pregnancy. Timmy quickly told him that legally she did not have to tell them about it, and furthermore, an employment decision could not be based on her pregnancy. Helen observed that though legally this was true, from a practical standpoint the dealership could not afford to be without a sales manger for an extended period of time. Timmy agreed. He, too, was concerned about her potential absence as well as her potential inability to work for long periods under intense pressure, especially when they needed to reduce inventory. Helen also reminded them that although Gladys was clearly the best applicant, there were at least nine other applicants who would be suitable sales mangers.
What employment laws are of issue in this scenario?
Please cite sources (:
The labor laws relevant to this scenario relate to discrimination during pregnancy and equal opportunity in employment.
Under the U.S. Pregnancy Discrimination Act (PDA), it is illegal to discriminate against an employee or applicant based on pregnancy, childbirth, or a related medical condition. This means that employers cannot make hiring decisions, such as hiring, firing, or promoting, based on an individual's pregnancy status.
It touches on the need to maintain equal employment opportunities. This implies the principle that people should be treated fairly and without discrimination in the workplace, regardless of protected characteristics such as race, sex, age or nationality. Employers have a duty to provide equal opportunities to all applicants and employees.
In this case, the problem arises when an employer learns of an applicant's pregnancy and considers possible consequences, such as the applicant's potential absence from work and ability to work under pressure. Employers recognize legal protections from pregnancy discrimination, but the practical implications and the need for sales manager outlets that can withstand long hours and intense pressure are debated.
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