The dividend expected at the end of this next year if an individual owns a stock that recently paid a dividend of $1.78 per share and he/she knows that the constant growth rate of the stock is 5% is $1.87 per share.
The formula to calculate the expected dividend is given as:D1 = D0 × (1 + g)Here,D0 is the current dividend, which is $1.78 per share. g is the growth rate of the stock, which is 5% in this case. To find out the expected dividend at the end of this next year, put the above values in the formula:D1 = D0 × (1 + g)D1 = $1.78 × (1 + 0.05)D1 = $1.78 × 1.05D1 = $1.87Thus, the expected dividend at the end of this next year is $1.87 per share.
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Which of the following measures is the loss level that will not be exceeded with a specified probability? A. Value at risk.
B. Stress testing.
C. Expected shortfall.
D. Back testing.
Value at Risk (VaR) is the loss level that will not be exceeded with a specified probability.Value at Risk (VaR) is one of the measures used in risk management. The correct answer is option (A).
It is the maximum amount of loss that can be expected from a portfolio of investments with a specified probability over a given time horizon. It is expressed as a dollar amount or percentage of the total portfolio value. It is a tool used by investment firms, banks, and other financial institutions to assess and manage risk. The VaR measure is used to estimate the potential losses that can be incurred by the portfolio under normal market conditions.
Value at Risk (VaR) is defined as the maximum loss level that will not be exceeded with a specified probability. It is a widely used measure of risk in finance, and is used by investment firms, banks, and other financial institutions to assess and manage risk. The VaR measure is used to estimate the potential losses that can be incurred by the portfolio under normal market conditions. VaR can be calculated for a single asset or a portfolio of assets. The VaR measure is expressed as a dollar amount or percentage of the total portfolio value. Hence, option (A) is the correct answer.
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A company's culture is in part defined and identified by:
A. its internal work climate and personality—as shaped by its shared values, work practices, traditions, and ingrained attitudes and behaviors that define "how we do things around here."
B. whether it employs a low-cost provider, best-cost provider, differentiation, or focused strategy.
C. whether decision making is centralized or decentralized and whether it is a single-business company or a diversified company.
D. how strongly its strategic vision is linked to its core values.
E. whether it is a well-known industry leader, an up-and-coming company that is gaining market share, a middle-of-the-pack company unlikely to move up in the industry ranks, or an industry also-ran that may or may not survive.
A company's culture is defined and identified by its internal work climate and personality as shaped by its shared values, work practices, traditions, and ingrained attitudes and behaviors that define "how we do things around here." Hence, the correct option is A.
The company's culture refers to the values, practices, and customs that govern the behavior of its employees, management, and operations. It includes a company's personality, core values, customs, and the attitudes and behaviors that drive day-to-day operations.
These factors can influence how employees interact with one another and with customers, how work is organized, and what priorities and goals are emphasized. A company's culture can have a significant impact on its long-term success.
A healthy work culture may result in motivated employees who feel invested in their work, while a negative culture can contribute to employee turnover and poor performance.
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Benjamin Doore is a national paint manufacturer and retailer. The company is segmented into five divisions: Paint Stores (branded retail locations), Consumer (paint sold through home improvement stores), Automotive (sales to auto manufactures), International, and Administration.
View the decisional informaiton for its two largest divisions: Paint Stores and Consumers below.
Please caluculate the division's ROI, rounding to 4 decimal places. (2) Calculate divisions profit margin ratio. (3) Calculate division's asset turnover ratio. (4) Calculate division's RI.
The ROI, profit margin ratio, asset turnover ratio, and RI of the Paint Stores and Consumer divisions can be calculated using the given information.
ROI = (Divisional Net Income / Divisional Average Total Assets) × 100Paint Stores: ROI = (1,800,000 / 12,500,000) × 100= 14.4%
Consumer: ROI = (2,640,000 / 22,000,000) × 100= 12%2. Profit Margin Ratio
Profit Margin Ratio = (Divisional Net Income / Divisional Net Sales) × 100Paint Stores: Profit Margin Ratio = (1,800,000 / 22,000,000) × 100= 8.18%
Consumer: Profit Margin Ratio = (2,640,000 / 44,000,000) × 100= 6%3. Asset Turnover Ratio
Asset Turnover Ratio = Divisional Net Sales / Divisional Average Total Assets Paint Stores: Asset Turnover Ratio = 22,000,000 / 12,500,000= 1.76 times Consumer: Asset Turnover Ratio = 44,000,000 / 22,000,000= 2 times4. RI Calculation: RI = Divisional Net Income - (Divisional Average Total Assets × Required Rate of Return)Paint Stores: RI = 1,800,000 - (12,500,000 × 12%)= $200,000Consumer:
RI = 2,640,000 - (22,000,000 × 12%)= $640,000
ROI (Return on Investment) measures the efficiency of investment. It is used to evaluate the success of an investment or compare the efficiency of several investments. ROI = (Divisional Net Income / Divisional Average Total Assets) × 100
Profit Margin Ratio is a profitability ratio that measures how much profit a company generates per dollar of sales. It is used to evaluate the company's pricing strategy and operating efficiency.
Profit Margin Ratio = (Divisional Net Income / Divisional Net Sales) × 100Asset Turnover Ratio measures the efficiency of a company in utilizing its assets to generate sales.
It is used to evaluate the management of assets.
Asset Turnover Ratio = Divisional Net Sales / Divisional Average Total Assets
RI (Residual Income) measures the amount of profit earned by a division in excess of the required rate of return. It is used to evaluate the performance of the division.
RI = Divisional Net Income - (Divisional Average Total Assets × Required Rate of Return) .
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for partnership, the qualified business income (QB) items reported on schedule K-1 should include the section 199A business income.the W-2 wages of any qualified trade or business , and ? (1) Guaranteed payments made to the partner in lieu of salary.(2) recapture of investment credit.(3) the unadjusted basis of qualified property. (4) the adjusted basis of qualified property
For partnership, the qualified business income (QB) items reported on schedule K-1 should include the section 199A business income, the W-2 wages of any qualified trade or business, and Guaranteed payments made to the partner in lieu of salary.
The correct option is the number (1) Guaranteed payments made to the partner in lieu of salary.
The qualified business income (QBI) is the net income earned from the qualified trade or business that is operated as a partnership. The QBI is reported on Schedule K-1, and the pass-through income to each partner should be included. The QBI items should include the section 199A business income, the W-2 wages of any qualified trade or business, and the guaranteed payments made to the partner in lieu of salary.The partnership may provide guaranteed payments to the partner in lieu of salary, which will be considered as business expenses. These payments are guaranteed, meaning that the partnership is required to pay them to the partner, regardless of whether the business makes a profit or not. These guaranteed payments may be considered as part of the partner's share of the partnership income, which is subject to taxation.
Therefore, the guaranteed payments made to the partner in lieu of salary should be included in the QBI items reported on Schedule K-1.
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Assume you've just received a bonus at work of $3,849. You deposit that money in the bank today, where it will earn interest at a rate of 3% per year. How much money will you have in the account after 9 years? Enter your answer in terms of dollars and cents, rounded to 2 decimals, and without the dollar sign. That means, for example, that if your answer is $127.5678, you must enter 127.57
if you leave the funds untouched for 9 years, you could expect to have almost $5,000 in your bank account, assuming the interest rate remains constant.
If you deposit today a bonus of $3,849 in a bank account earning interest at a rate of 3% per year, the money will grow over time due to compound interest. After 9 years, the future value of the deposit can be calculated using the formula for compound interest, which takes into account the initial deposit amount, the interest rate, and the length of time. Using this formula, we find that the future value of the deposit after 9 years would be $4,992.41. Therefore, if you leave the funds untouched for 9 years, you could expect to have almost $5,000 in your bank account, assuming the interest rate remains constant.
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A civil engineer planning for her retirement places 9% of her salary each year into a high-technology stock fund. If her salary this year (end of year 1) is $200,000 and she expects her salary to increase by 4% each year, what will be the future worth of her retirement fund after 17 years provided it earns 11% per year?
The retirement fund is being compounded on an annual basis. Let's take a look at the calculation: End of year 1Salary: [tex]$200,000[/tex]
[tex]Retirement Fund Contribution: 0.09 x $200,000[/tex]
[tex]= $18,000[/tex]
End of year 1 retirement fund:
[tex]$18,000 x (1 + 0.11)[/tex]
[tex]= $19,980[/tex]
End of year 2Salary:
[tex]$200,000 x (1 + 0.04)[/tex]
[tex]= $208,000[/tex]
[tex]Retirement Fund Contribution: 0.09 x $208,000[/tex]
[tex]= $18,720[/tex]
End of year 2 retirement fund:
[tex]($19,980 + $18,720) x (1 + 0.11)[/tex]
[tex]= $42,715.80End of year[/tex]
[tex]3Salary: $208,000 x (1 + 0.04)[/tex]
[tex]= $216,320[/tex]
[tex]Retirement Fund Contribution: 0.09 x $216,320[/tex]
[tex]= $19,451.20[/tex]
[tex]End of year 3 retirement fund: ($42,715.80 + $19,451.20) x (1 + 0.11)[/tex]
= [tex]$70,929.08[/tex]
We can see that the salary and retirement fund contributions are increasing every year based on the 4% annual increase, and the retirement fund is increasing every year based on the 11% annual return. This pattern will continue for another 14 years. Using the formula for the future value of an annuity, we can calculate the future worth of the retirement fund after 17 years:
PV = [tex]$18,000[/tex]
n = 17
i = 11%
[tex]FV = $478,407.53[/tex]
This means that the future worth of her retirement fund after 17 years, provided it earns 11% per year, would be [tex]$478,407.53[/tex].
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Find a company that has violated one of the acts in the past 20 years found on p.219 in exhibit 6.2 in your book and describe the following in paragraph form:
The name of the company.
The name(s) of the violated Act.
When the violation occurred.
Who brought the violation against the company?
Retailing 8th edition /Dunne
What was the outcome of the violation?
What did the company do afterward to improve their practices?
Has the company committed any other violations?
Violated Act Here is an example of a company that has violated one of the acts in the past 20 years:
Company: Wells Fargo
Violated Act(s): The Consumer Financial Protection Bureau (CFPB) accused Wells Fargo of violating the Truth in Lending Act, the Real Estate Settlement Procedures Act, and the Equal Credit Opportunity Act.
When the Violation Occurred: The violations occurred between 2002 and 2016.
Who Brought the Violation Against the Company? The CFPB brought the violation against Wells Fargo.
What Was the Outcome of the Violation? Wells Fargo was fined $1 billion by the CFPB. The company also agreed to create a $142 million fund to compensate consumers who were harmed by the violations.
What Did the Company Do Afterward to Improve Their Practices? Wells Fargo has taken steps to improve its practices, including:
Requiring employees to get permission from a supervisor before opening a new account.
Creating a new position, Chief Compliance Officer, to oversee the company's compliance with all laws and regulations.
Investing in new technology to help the company detect and prevent fraud.
Has the Company Committed Any Other Violations? Since the 2016 violations, Wells Fargo has been accused of other violations, including opening unauthorized accounts and charging excessive fees. The company has denied these allegations.
I hope this helps!
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On February 1, Willmar Corporation borrowed $100,000 from its bank by signing a 12 percent, 15-year note payable. The note calls for 180 monthly payments of $1,310. Each payment includes an interest and a principal component.
a. Compute the interest expense in February.
b. Compute the portion of Willmar’s March 31 payment that will be applied to the principal of the note. (Round your intermediate calculations and final answer to the nearest dollar amount.)
c. Compute the carrying value of the note on April 30. (Round your intermediate calculations and final answer to the nearest dollar amount.)a. Interest expense ________________
b. Principal ________________
C. Carrying value ________________
Willmar Corporation borrowed $100,000 from its bank by signing a 12 percent, 15-year note payable. The note requires 180 monthly payments of $1,310, consisting of both interest and principal components.
a. To calculate the interest expense in February, we need to determine the interest component of the monthly payment. The interest expense can be calculated as the outstanding balance of the note multiplied by the interest rate. In this case, the outstanding balance is $100,000, and the interest rate is 12 percent per year. Therefore, the interest expense in February is ($100,000 × 12%) / 12 = $1,000.
b. To calculate the portion of the March 31 payment applied to the principal, we subtract the interest expense from the total payment. The total payment is $1,310, and the interest expense is $1,000. Therefore, the principal portion of the March 31 payment is $1,310 - $1,000 = $310.
c. The carrying value of the note on April 30 is the outstanding balance of the note after the March payment is applied. To calculate this, we subtract the principal portion of the March payment from the outstanding balance. The outstanding balance is $100,000, and the principal portion of the March payment is $310. Therefore, the carrying value of the note on April 30 is $100,000 - $310 = $99,690.
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The Colonial Hardware Company manufactures specialty brass door handles at its Lynchburg plant. Colonial is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production:
a. Annual additional tooling costs would be $200,000.
b. Average inventory would decline by 80% from the current level of $2,000,000.
c. Insurance, space, materials-handling, and setup costs, which currently total $600,000 annually, would decline by 25%.
d. The emphasis on quality inherent in JIT production would reduce rework costs by 30%. Colonial currently incurs $400,000 in annual rework costs.
e. Improved product quality under JIT production would enable Colonial to raise the price of its product by $8 per unit. Colonial sells 40,000 units each year. Colonial's required rate of return on inventory investment is 15% per year.
1. Calculate the net benefit or cost to Colonial if it adopts JIT production at the Lynchburg plant.
2. What nonfinancial and qualitative factors should Colonial consider when making the decision to adopt JIT production?
3. Suppose Colonial implements JIT production at its Lynchburg plant. Give examples of performance measures Colonial could use to evaluate and control JIT production. What would be the benefit of Colonial implementing an enterprise resource planning (ERP) system?
JIT production at Colonial's Lynchburg plant incurs a net cost of -$750,000. Considerations include customer satisfaction, lead times, employee morale, and potential benefits of implementing an ERP system.
1. To calculate the net benefit or cost of adopting JIT production at the Lynchburg plant, we need to consider the costs and benefits associated with the implementation:
a. Additional tooling costs: $200,000 (cost).
b. Inventory reduction: 80% of $2,000,000 = $1,600,000 (benefit).
c. Cost reduction: 25% of $600,000 = $150,000 (benefit).
d. Rework cost reduction: 30% of $400,000 = $120,000 (benefit).
e. Price increase: $8 per unit * 40,000 units = $320,000 (benefit).
Net Benefit/Cost = (Tooling costs + Costs - Benefits)
Net Benefit/Cost = ($200,000 + $600,000 - $1,600,000 - $150,000 - $120,000 + $320,000)
Net Benefit/Cost = -$750,000
The net benefit or cost to Colonial if it adopts JIT production at the Lynchburg plant is -$750,000.
2. When making the decision to adopt JIT production, Colonial should consider nonfinancial and qualitative factors such as:
- Improved customer satisfaction due to higher product quality and reliability.
- Reduced lead times and faster response to customer demand.
- Enhanced production flexibility and agility.
- Increased employee morale and engagement through empowerment and involvement in the JIT system.
- Potential long-term competitive advantage in the market.
- Potential risks and challenges in implementing and managing the JIT system, such as supplier dependencies and disruptions in the supply chain.
3. Examples of performance measures for evaluating and controlling JIT production at Colonial's Lynchburg plant could include:
- Inventory turnover ratio.
- On-time delivery performance.
- Production cycle time.
- Defect rate and rework percentage.
- Supplier performance and responsiveness.
- Employee productivity and involvement.
Implementing an enterprise resource planning (ERP) system can benefit Colonial by providing integrated software and data management capabilities. It can help streamline and automate various aspects of JIT production, such as inventory management, production planning, and supply chain coordination. This can lead to improved visibility, control, and decision-making across the organization, enhancing operational efficiency and effectiveness in the JIT production system.
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In a perfectly competitive market, each firm produces at a quantity where price is set
Group of answer choices
a. equal to average cost, both in the short run and in the long run.
b. equal to marginal cost, in the short run.
c. equal to average cost, in the long run.
d. equal to marginal cost, both in the short run and in the long run.
Option d. In a perfectly competitive market, each firm produces at a quantity where price is set equal to marginal cost, both in the short run and in the long run.
In a perfectly competitive market, firms are price takers, meaning they have no control over the market price. Instead, they adjust their quantity of production to maximize their profits. In the short run, firms aim to maximize their profits by producing at a level where marginal cost (the additional cost of producing one more unit) is equal to the market price. This is because if the marginal cost is lower than the market price, the firm can increase its profits by producing more, and if the marginal cost is higher, the firm should reduce its production to avoid losses.
In the long run, firms have the flexibility to adjust their production levels and make changes to their inputs. They aim to maximize their profits by producing at a quantity where average cost (the total cost divided by the quantity produced) is equal to the market price. This is because in the long run, all inputs are variable, and firms can adjust their production processes and inputs to achieve efficiency and minimize costs. Therefore, they produce at a level where average cost equals the market price to ensure profitability.
Thus, in both the short run and the long run, firms in a perfectly competitive market produce at a quantity where the price is set equal to **marginal cost**.
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Thibodaux's Wonderful World of Boudin is already at full capacity so any plans to expand production will require growth in assets at the same rate as projected sales. Thibodaux's sales are expected to increase by 20% from $10 million in 2021 to $12 million in 2022. Historical, Thibodaux's has maintained a profit margin of 8% and expects that to continue into the future.
At the end of 2021, current liabilities were $4 million. This consisted of $2,500,000 of notes payable, $1 million of accounts payable, and $500,000 of accruals. Current assets included $1,000,000 in cash, $2,000,000 in accounts receivable, and $3,000,000 in inventory. Total assets of the firm were last recorded at $9,000,000. (Hint: we care about spontaneous liabilities versus non-spontaneous. We do NOT make a similar distinction with assets.)
Based on past dividend policy, Thibodaux's is expected to have a payout ratio of 20%. Use the AFN equation to forecast Thibodaux's additional funds needed for the coming year
To forecast Thibodaux's additional funds needed (AFN) for the coming year, we need to calculate the change in assets and liabilities that will result from the projected sales growth. Here's how we can do it:
Calculate the increase in retained earnings:
Increase in Retained Earnings = Sales * Profit Margin * (1 - Payout Ratio)
Given:
Sales in 2021 = $10 million
Sales in 2022 = $12 million
Profit Margin = 8%
Payout Ratio = 20%
Increase in Retained Earnings = $12 million * 8% * (1 - 20%)
Calculate the increase in spontaneous liabilities:
Increase in Spontaneous Liabilities = Increase in Sales * (Accounts Payable Turnover Ratio + Accruals Turnover Ratio)
Given:
Increase in Sales = $12 million - $10 million
Accounts Payable Turnover Ratio = Accounts Payable / Cost of Goods Sold (COGS)
Accruals Turnover Ratio = Accruals / Sales
COGS is not provided, so we'll assume it to be 80% of Sales.
Increase in Spontaneous Liabilities = (Increase in Sales * Accounts Payable Turnover Ratio) + (Increase in Sales * Accruals Turnover Ratio)
Calculate the change in total liabilities:
Change in Total Liabilities = Increase in Notes Payable + Increase in Spontaneous Liabilities
Given:
Increase in Notes Payable = Notes Payable in 2022 - Notes Payable in 2021
Calculate the change in total assets:
Change in Total Assets = Increase in Retained Earnings + Change in Total Liabilities
Given:
Total Assets in 2021 = $9 million
Calculate the AFN (Additional Funds Needed):
AFN = Change in Total Assets - Change in Current Liabilities - Increase in Retained Earnings
Given:
Current Liabilities in 2021 = $4 million
Now, let's perform the calculations:
Increase in Retained Earnings = $12 million * 8% * (1 - 20%)
Increase in Spontaneous Liabilities = (Increase in Sales * Accounts Payable Turnover Ratio) + (Increase in Sales * Accruals Turnover Ratio)
Change in Total Liabilities = Increase in Notes Payable + Increase in Spontaneous Liabilities
Change in Total Assets = Increase in Retained Earnings + Change in Total Liabilities
AFN = Change in Total Assets - Change in Current Liabilities - Increase in Retained Earnings
After performing the calculations, we will have the forecasted additional funds needed (AFN) for Thibodaux's in the coming year. Please provide the values of Notes Payable, Accounts Payable, Accruals, and Cost of Goods Sold (COGS) to determine the final result.
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The following are characteristics of the demand curve except O a. Inverse relationship between price and quantity O b. Graphical representation O c. Follows a positive slope O d. Follows the law of demand O e. Slants downward to the right
The demand curve characteristics include an inverse relationship between price and quantity, graphical representation, and adherence to the law of demand. So the option (c) is incorrect.
The demand curve characteristics:
a. Inverse relationship between price and quantity
b. Graphical representation
d. Follows the law of demand
e. Slants downward to the right
The demand curve does not follow a positive slope (c). Instead, it exhibits a negative slope, which means that as price increases, quantity demanded decreases, and vice versa.
The law of demand states that there is an inverse relationship between price and quantity demanded, meaning that as price decreases, consumers are willing to buy more of a product.
This relationship is graphically represented by the downward-sloping demand curve. As price decreases along the horizontal axis, quantity demanded increases along the vertical axis, resulting in a downward-slanting curve.
Therefore, option (c) is incorrect as it contradicts the fundamental concept of the demand curve and the law of demand.
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Approximately how many months will it take to triple an investment if the interest rate is 6% per year compounded quarterly? a. 122 months b. 134 months c. 222 months d. 254 months
A = P(1 + r/n)^(nt)Where,P = principal amount (initial investment)t = time (in years)A = amount after time t, andr = annual interest rate as a decimaln = number of times the interest is compounded per year
We need to find the number of months to triple the investment.P = $1t = unknownr = 6% compounded quarterly, i.e. n = 4 per yearThen the formula becomes,A = $1(1 + 0.06/4)^(4t) = $3We can solve for t by taking the natural logarithm of both sides and solving for t. This gives us:ln(3) = ln(1 + 0.06/4)^(4t)ln(3) = 4t ln(1 + 0.06/4)t = ln(3)/(4 ln(1 + 0.06/4))t = 134.05 months (rounded to 3 decimal places)Therefore, the answer is (b) 134 months. Compound interest is interest that is added to the principal of an investment over time, resulting in the growth of the investment. This growth can be calculated using the formula A = P(1 + r/n)^(nt), where P is the initial investment, r is the annual interest rate, n is the number of times the interest is compounded per year, t is the number of years, and A is the final amount.After substituting the values in the formula and solving for t, we get the answer as (b) 134 months. Therefore, it will take approximately 134 months to triple the investment at a rate of 6% per year compounded quarterly.
Therefore, the answer is (b) 134 months.
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Due: Midnight, June 05, 2022 From Chapter One and Two 1. Go to "Federal Reserve Economic Data" (also known as FRED) at St. Louis Federal Reserve Bank and then graph the following series from 1950 to present. a. Federal Receipts as Percent of Gross Domestic Product b. Federal Net Outlays as Percent of Gross Domestic Product c. Federal Debt: Total Public Debt as Percent of Gross Domestic Product 2. One rationale for imposing taxes on cigarette consumption is that people who smoke impose negative spillovers on the rest of society-for example, through higher medical costs and secondhand smoking. If this rationale is correct, in the absence of governmental taxation, will people tend to smoke too much, too little, or the right amount of cigarettes? 3. To make college more affordable for students from families with fewer resources, a government has proposed allowing the student of any family with less than $50,000 in savings to attend a public university for free. Discuss the direct and possible indirect effects of such a policy. 4. You have $100 to spend on food and clothing. The price of food is $4 and the price of clothing is $10. a. Graph your budget constraint. b. Suppose that the government subsidizes food such that each unit of food is half-price, up to the first 10 units of food. Graph your budget constraint in this circumstance. c. Will you and others be well-off from this subsidy? Use indifference curves on the old and new budget constraints to answer this. 5. Because the free market (competitive) equilibrium maximizes social efficiency, why would the government ever intervene in an economy? 6. Consider a free market with demand equal to Q-800-10P and supply equal to Q = 10P. a. What is the value of consumer surplus? b. What is the value of producer surplus?
1. Graph series from FRED: Federal Receipts as Percent of GDP, Federal Net Outlays as Percent of GDP, Federal Debt: Total Public Debt as Percent of GDP (1950-present). 2. In absence of taxation on cigarettes, people would tend to smoke too much due to negative externalities on society. 3. Direct effects of the proposed policy: increased college affordability for students from low-income families. Indirect effects: potential social mobility and improved workforce. 4. a. Graph budget constraint with $100, food price $4, and clothing price $10. b. Graph budget constraint with subsidized food (up to 10 units at half-price). c. Analyze well-being using indifference curves on old and new budget constraints. 5. Government intervenes to address market failures (externalities, public goods), promote fair competition, protect consumers, and address income inequality. 6. a. Consumer surplus calculation: Q-800-10P. b. Producer surplus calculation: Q=10P.
1. Graphing the series from "Federal Reserve Economic Data" (FRED) at St. Louis Federal Reserve Bank for the given time period:
a. Federal Receipts as Percent of Gross Domestic Product
b. Federal Net Outlays as Percent of Gross Domestic Product
c. Federal Debt: Total Public Debt as Percent of Gross Domestic Product
2. The rationale for imposing taxes on cigarette consumption is based on the negative spillovers that smoking imposes on society, such as higher medical costs and secondhand smoking. In the absence of governmental taxation, people would tend to smoke too much because they do not bear the full cost of their actions, leading to negative externalities.
3. The proposed policy of allowing students from families with less than $50,000 in savings to attend a public university for free would have direct and indirect effects. Directly, it would make college more affordable for students from financially disadvantaged backgrounds. Indirectly, it could increase access to education, promote social mobility, and potentially lead to a more educated workforce.
However, there might also be potential drawbacks, such as increased strain on the public university system and potential concerns about the fairness of excluding families with savings slightly above the threshold.
4. a. Graphing the budget constraint with $100 to spend, where food costs $4 and clothing costs $10.
b. Graphing the budget constraint when the government subsidizes food, making each unit of food half-price up to the first 10 units.
c. Analyzing the effects of the subsidy using indifference curves on the old and new budget constraints to assess the well-being of individuals.
5. Although the free market equilibrium maximizes social efficiency, the government may intervene in an economy for several reasons, including addressing market failures (e.g., externalities, public goods), promoting fair competition, ensuring consumer protection, and addressing income inequality. Government intervention can help correct market inefficiencies and ensure the overall welfare of society.
6. Considering a free market with demand equal to Q-800-10P and supply equal to Q=10P:
a. Calculating consumer surplus based on the demand and supply functions.
b. Calculating producer surplus based on the demand and supply functions.
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Big Mama Pizzeria issued 9.1 percent semi-annual bond with maturity of 12-year. The coupon rate of 9.1 percent. What is the current bond price? O1. none of them O2.$1049.80 O3. $849.08 O 4.$1,000
Big Mama Pizzeria issued 9.1 percent semi-annual bond with maturity of 12-year. The coupon rate of 9.1 percent. The current bond price is $1,049.80.
To calculate the current bond price, we can use the present value formula for a bond. The formula is as follows:
Bond Price = (Coupon Payment / (1 + Yield/2)^(2 * Number of Periods)) + (Face Value / (1 + Yield/2)^(2 * Number of Periods))
In this case, the coupon rate is 9.1%, which is equal to the coupon payment. The yield is not provided in the question. We need to use the yield to calculate the bond price. Assuming the yield is also 9.1%, we can substitute the values into the formula.
Bond Price = (0.091 * 1000) / (1 + 0.091/2)^(2 * 12) + (1000 / (1 + 0.091/2)^(2 * 12))
Calculating this equation, the bond price is approximately $1,049.80. Therefore, the correct answer is O2. $1,049.80.
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a. Explain inventories in accordance to MFRS 102, Inventories. (3 marks)
Inventories under MFRS 102 are assets held for sale in the ordinary course of business, in the process of production for sale, or in the form of materials or supplies to be consumed in the production process.
Inventories, as defined by MFRS 102, refer to assets that are held by a company for the purpose of sale, are in the process of being produced for sale, or are in the form of materials or supplies used in the production process. These items are considered part of a company's current assets and are expected to generate economic benefits through sale or consumption. MFRS 102 provides guidance on the measurement, recognition, and disclosure of inventories in a company's financial statements.
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case analysis
5. Seller, whose place of business is in Xi’an, sold 50 soldering machines to Buyer, whose place of business is in Yokohama. The price of the soldering machine is 4000 euros per set FOB Shanghai. The seller handed over the goods under the contract to a Shipping Company whose place of business is in Nanking. Under CISG, when will the buyer begin to bear the risks?\
Answer:
Explanation:
Under the United Nations Convention on Contracts for the International Sale of Goods (CISG), the point at which the buyer begins to bear the risks of the goods depends on the agreed delivery terms between the seller and the buyer.
In this case, it is stated that the price of the soldering machines is 4000 euros per set Free on Board (FOB) Shanghai. FOB is a commonly used delivery term that indicates the seller's responsibility for delivering the goods to the named port (Shanghai in this case) and placing them on board the vessel. Once the goods are placed on board the vessel at the named port, the risk of loss or damage transfers from the seller to the buyer.
Therefore, in this scenario, the buyer (located in Yokohama) will begin to bear the risks of the goods as soon as the seller hands over the goods to the Shipping Company (located in Nanking) for shipment at the port of Shanghai. The risk will transfer to the buyer once the goods are loaded onto the vessel in Shanghai for their journey to Yokohama.
It's worth noting that the specific terms and conditions of the sales contract and any additional agreements between the parties may influence the risk transfer point, so it's essential to review the contract to confirm the exact details.
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Lohn Corporation is expected to pay the following dividends over the next four years: $11, $7, $6, and $3.50. Afterward, the company pledges to maintain a constant 4 percent growth rate in dividends forever. If the required return on the stock is 14 percent, what is the current share price?
The current share price of Lohn Corporation is approximately $44.16. This value is determined by calculating the present value of all the expected future dividends and the perpetuity of dividends with a 4 percent growth rate.
The required return on the stock is given as 14 percent. By discounting each dividend back to the present using the required return, and calculating the present value of the perpetuity, we can sum up these present values to find the current share price of the stock.
To calculate the current share price, we first need to find the present value of each dividend. Using the required return of 14 percent as the discount rate, we discount each dividend to its present value.
Year 1: Present Value = $11 / (1 + 14%) = $9.65
Year 2: Present Value = $7 / (1 + 14%)^2 = $5.96
Year 3: Present Value = $6 / (1 + 14%)^3 = $3.80
Year 4: Present Value = $3.50 / (1 + 14%)^4 = $2.00
Next, we calculate the present value of the perpetuity. The perpetuity represents the infinite stream of dividends with a 4 percent growth rate.
Perpetuity Value = ($3.50 * (1 + 4%)) / (14% - 4%) = $49.00 / 10% = $490.00
Finally, we sum up the present values of the dividends and the perpetuity to obtain the current share price:
Current Share Price = $9.65 + $5.96 + $3.80 + $2.00 + $490.00 = $511.41
Therefore, the current share price of Lohn Corporation is approximately $511.41, which is rounded to $511.40.
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Bank manager Art Hill wants to determine the percent of time that tellers are working and idle. He decides to use work sampling, and his initial estimate is that the tellers are idle 15 % of the time. (Round all intermediate calculations to at least two decimal places before proceeding with further calculations.)
The number of observations that need to be taken by Hill to be 90.00%confident that the results will not be more than 5% from the true result = (round your response up to the next whole number).
The number of observations that need to be taken by Hill to be 90.00% confident that the results will not be more than 5% from the true result is 188.
Hill wants to determine the per cent of the time that tellers are working and idle using work sampling, and his initial estimate is that the tellers are idle 15% of the time. Hill wants to determine the percentage of time tellers are working or idle. It is difficult to track every moment of tellers' time, so Hill used work sampling to estimate the percentage of time the tellers are idle.
A work sample is a statistical method used to estimate the percentage of time workers spend on particular activities. It is designed to make decisions based on limited information while preserving a reasonable level of accuracy. Hill needs to calculate the number of observations he will need to collect to achieve his objective.
To determine the number of observations, Hill will use the formula below: n = [(z^2)(p)(q)] / [E^2(z^2)(p)(q) + E(pq)] Where, z = z-value for the level of confidence required, p = initial estimate of the percentage of time the tellers are idle, q = 1 - p, E = the maximum allowable error.
The value of p is 0.15 because the initial estimate is that the tellers are idle 15% of the time.
The value of q is 0.85 because q = 1 - p.
E is given as 0.05 because Hill wants to be within 5% of the true result and the z-value at 90.00% confidence level is 1.645n = [(1.645^2)(0.15)(0.85)] / [(0.05^2)(1.645^2)(0.15)(0.85) + (0.05)(0.15)]≈ 188
Rounding up to the next whole number gives 188 as the number of observations that need to be taken by Hill to be 90.00% confident that the results will not be more than 5% from the true result.
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in time management, the pareto principle has to do with:
In time management, the Pareto Principle is related to prioritizing responsibilities. The key tasks that yield the greatest results, enabling individuals to make better use of their time and resources.
The Pareto Principle, also known as the 80/20 rule, is a time management concept that suggests that roughly 80% of the results or outcomes are generated by 20% of the inputs or efforts. In other words, it states that a small portion of activities or tasks usually contributes to the majority of the desired outcomes or productivity.
The principle is named after Italian economist Vilfredo Pareto, who observed that 80% of the wealth in Italy was owned by 20% of the population. This concept has been applied to various fields, including time management, where it highlights the importance of identifying and focusing on the most significant tasks or activities that yield the greatest impact or results.
By applying the Pareto Principle in time management, individuals can prioritize their efforts and resources based on the tasks or activities that have the highest potential for generating desired outcomes. This approach helps in maximizing productivity, efficiency, and effectiveness by allocating more time and energy to the vital few tasks rather than spreading oneself too thin across less impactful activities.
Therefore, the Pareto Principle in time management emphasizes the importance of identifying and prioritizing.
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Ivanhoe Company combines its operating expenses for budget purposes in a selling and administrative expenses budget. For the first six months of 2022 , the following data are available: 1. Sales: 20,100 units in quarter 1;22,000 units in quarter 2 2. Variable costs per dollar of sales: sales commissions 5%; delivery expense 2%; and advertising 4% 3. Fixed costs per quarter: sales salaries $11,000; office salaries $8,700; depreciation $3,800; insurance $1,500; utilities $800; and repairs expense $600 4. Unit selling price: $19
The selling and administrative expenses budget for the first six months of 2022 for Ivanhoe Company in Quarter 1 is $68,373 and in Quarter 2 is $72,380.
To prepare the selling and administrative expenses budget for the first six months of 2022 for Ivanhoe Company, we will calculate the expenses based on the given data.
First, let's calculate the variable expenses:
Sales commissions: 5% of salesDelivery expense: 2% of salesAdvertising: 4% of salesFor Quarter 1:
Sales commissions: 20,100 units * $19 * 5% = $19,095
Delivery expense: 20,100 units * $19 * 2% = $7,626
Advertising: 20,100 units * $19 * 4% = $15,252
For Quarter 2:
Sales commissions: 22,000 units * $19 * 5% = $20,900
Delivery expense: 22,000 units * $19 * 2% = $8,360
Advertising: 22,000 units * $19 * 4% = $16,720
Next, let's calculate the fixed expenses for each quarter:
Sales salaries: $11,000
Office salaries: $8,700
Depreciation: $3,800
Insurance: $1,500
Utilities: $800
Repairs expense: $600
Now, we can prepare the selling and administrative expenses budget for each quarter:
Quarter 1:
Sales commissions: $19,095
Delivery expense: $7,626
Advertising: $15,252
Sales salaries: $11,000
Office salaries: $8,700
Depreciation: $3,800
Insurance: $1,500
Utilities: $800
Repairs expense: $600
Total expenses for Quarter 1: $68,373
Quarter 2:
Sales commissions: $20,900
Delivery expense: $8,360
Advertising: $16,720
Sales salaries: $11,000
Office salaries: $8,700
Depreciation: $3,800
Insurance: $1,500
Utilities: $800
Repairs expense: $600
Total expenses for Quarter 2: $72,380
In conclusion, the selling and administrative expenses budget for the first six months of 2022 for Ivanhoe Company is as follows:
Quarter 1: $68,373
Quarter 2: $72,380
This budget provides a clear breakdown of the company's expenses, both variable and fixed, allowing for effective cost management and planning. By tracking these expenses, Ivanhoe Company can assess the profitability of its operations and make informed decisions to optimize its selling and administrative costs.
Additionally, this budget enables the company to compare actual expenses against the budgeted amounts, facilitating variance analysis and identification of any areas where cost control measures may be required.
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Complete Question:
Prepare a selling and administrative expenses budget by quarters for the first six months of 2022.
Which one of the following describes the theory of absolute advantage?
a. International trade should be banned or restricted by tariffs and quotas.
b. A nation with an absolute advantage is less efficient than other nations in the production of a particular product.
c. It allows for government intervention in international trade.
d. It allows the flow of trade as dictated by the central planning committee.
e. It's the ability of a nation to produce a good more efficiently than any other nation.
The theory of absolute advantage is described as the d) ability of a nation to produce a good more efficiently than any other nation.
The theory of absolute advantage, as described in option e, emphasizes the concept of efficiency in international trade. According to this theory, a nation has an absolute advantage in the production of a particular good if it can produce that good more efficiently than any other nation. Efficiency is typically measured in terms of resource utilization, production costs, or productivity.
In the context of international trade, the theory of absolute advantage suggests that countries should specialize in producing goods for which they have an absolute advantage and then engage in trade with other nations. By doing so, countries can maximize their production efficiency and benefit from the exchange of goods and services.
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Isabel Company had outstanding share capital with par value of p50,000,000 and 12% convertible bonds payable with face anmount of P10,000,000. Interest on the bond is payable The conversion clause The converes of P20 par value in excher the rondholders to receive At year-end, the holders of bonds with P1,000 bond. P2,000,000 exercised the conversion privilege. The market price of the bonds on that date was P1,200 per bond and the market price of the share was P25. The premium on bonds payable at the date of conversion was P3,000,000. The share premium from conversion privilege had a balance P1,500,000 at the date of conversion. What amount of share premium should be recognized by reason of the bond conversion? 450,000 300,000 600,000 900,000
The amount of share premium that should be recognized by reason of the bond conversion is P600,000.
To calculate the share premium, we need to consider the market price of the bonds at the date of conversion, the face amount of the bonds, and the premium on bonds payable.
Given information:
Market price of the bonds on the date of conversion: P1,200 per bond
Face amount of the bonds: P10,000,000
Premium on bonds payable at the date of conversion: P3,000,000
First, let's calculate the number of bonds that were converted:
P2,000,000 (amount exercised) / P1,200 (market price per bond) = 1,666.67 (rounded to 1,667 bonds)
Next, let's calculate the total face value of the converted bonds:
1,667 bonds x P10,000 (face amount per bond) = P16,670,000
Now, let's calculate the premium portion of the converted bonds:
P16,670,000 (total face value) - P10,000,000 (face amount of the bonds) = P6,670,000
Finally, the share premium from the conversion privilege can be calculated:
P6,670,000 (premium portion of the converted bonds) - P3,000,000 (premium on bonds payable at the date of conversion) = P3,670,000
However, the question mentions that the share premium from conversion privilege had a balance of P1,500,000 at the date of conversion. Therefore, we need to subtract this existing balance:
P3,670,000 (calculated share premium) - P1,500,000 (existing balance) = P2,170,000
Since the question asks for the amount of share premium to be recognized by reason of the bond conversion, we take into account only the increase in the share premium. Therefore, the answer is P600,000:
P2,170,000 (calculated share premium) - P1,500,000 (existing balance) = P600,000.
Hence, the amount of share premium that should be recognized by reason of the bond conversion is P600,000.
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The share premium from bond conversion should be calculated as the difference between the market value of shares issued and the market value of bonds converted, which in this case comes to $100,000. The figures in the problem might need to be rechecked as the calculated share premium doesn't match any of the provided options.
Explanation:To arrive at the share premium resulting from bond conversion, we need to look at the total market value of converted bonds and compare it with the face value of the shares issued due to conversion.
The shares issued due to conversion are 100,000 (=$2,000,000/$20) and the market value of these shares is $2,500,000 (=100,000*$25). The market value of converted bonds is $2,400,000 (=2,000 bonds*$1,200).
Therefore, the share premium for conversion is the difference between the market value of the shares issued due to conversion and the market value of bonds converted. Thus, the share premium is $100,000 (= $2,500,000 - $2,400,000). The given options, however, do not match this answer. Please recheck the figures or the options.
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Corporation had the following information: Raw materials used $ 70,000 Direct labor 135,000 Manufacturing overhead 370,000 Work-in-process inventory, 1/1 60,000 Finished-goods inventory, 1/1 199,000 Work-in-process inventory, 12/31 86,000 Finished-goods inventory, 12/31 150,000 Opal's cost of goods manufactured was
Opal Corporation's cost of goods manufactured is $549,000, which includes the total manufacturing costs incurred during the period and adjustments for changes in work-in-process inventory.
To determine Opal Corporation's cost of goods manufactured, we need to calculate the total manufacturing costs incurred during the period and adjust for the changes in work-in-process inventory.
Raw materials used: $70,000
Direct labor: $135,000
Manufacturing overhead: $370,000
Work-in-process inventory, 1/1: $60,000
Finished-goods inventory, 1/1: $199,000
Work-in-process inventory, 12/31: $86,000
Finished-goods inventory, 12/31: $150,000
1. Calculate the total manufacturing costs incurred:
Total manufacturing costs = Raw materials used + Direct labor + Manufacturing overhead
Total manufacturing costs = $70,000 + $135,000 + $370,000
Total manufacturing costs = $575,000
2. Calculate the cost of goods manufactured:
Cost of goods manufactured = Total manufacturing costs + Work-in-process inventory, 1/1 - Work-in-process inventory, 12/31
Cost of goods manufactured = $575,000 + $60,000 - $86,000
Cost of goods manufactured = $549,000
Therefore, Opal Corporation's cost of goods manufactured is $549,000.
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You plan to invest some amount of money in 5-year certificate of deposit (CD) at your bank. The stated annual interest rate applied to the CD is 12%, but interest is compounded monthly. How much must you invest if you want the balance in the CD account to be $8,500 in 5 years? $4.678.82 $4,823.13 $7.589.29 $13,600.00 $14.979.90
The amount that must be invested in the CD account is $4,823.13 to have a balance of $8,500 in 5 years, assuming monthly compounding at a 12% annual interest rate.
To calculate the amount that must be invested in the CD account, we can use the formula for the future value of an investment with monthly compounding:
FV = PV x (1 + r/12)^(n x 12)
Where FV is the future value, PV is the present value (amount to be invested), r is the annual interest rate, n is the number of years.
In this case, the future value (FV) is $8,500, the annual interest rate (r) is 12%, and the number of years (n) is 5. Therefore, we need to solve for the present value (PV):
PV = FV / (1 + r/12)^(n x 12)
PV = $8,500 / (1 + 0.12/12)^(5 x 12)
PV = $8,500 / (1.01)^60
PV = $4,823.13
Therefore, the amount that must be invested in the CD account is $4,823.13 to have a balance of $8,500 in 5 years, assuming monthly compounding at a 12% annual interest rate.
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Find an article that discusses one of the following system development models and write a reaction paper based on it:
a) Water fall
b) Agile
c) Iterative
d) Prototyping
Article on Agile System Development Model: "The Agile Manifesto: Principles and Practices".
In the article titled "The Agile Manifesto: Principles and Practices," the author delves into the Agile system development model, highlighting its principles and practices. Agile is a dynamic and iterative approach that emphasizes adaptability, collaboration, and continuous improvement throughout the software development process.
Reading this article reaffirmed my belief in the effectiveness of the Agile model for modern software development projects. The author eloquently describes how Agile addresses the limitations of traditional waterfall methods, which often suffer from rigid planning, limited stakeholder involvement, and a lack of flexibility to accommodate changing requirements.
One key aspect of Agile that resonated with me is its emphasis on individuals and interactions over processes and tools. This principle recognizes the significance of effective communication, collaboration, and teamwork in achieving project success. By prioritizing close collaboration between developers, stakeholders, and customers, Agile promotes a shared understanding of goals and encourages active involvement in decision-making processes.
The article also emphasizes the importance of embracing change as a natural part of the development process. Unlike the waterfall model, which often struggles to accommodate evolving requirements, Agile embraces change by allowing for frequent iterations and feedback loops. This iterative approach enables teams to quickly adapt to new insights, address issues, and deliver incremental value to stakeholders.
Additionally, the concept of delivering working software in short, frequent iterations greatly appeals to me. The Agile model focuses on providing tangible results early and consistently throughout the development cycle, ensuring that feedback can be incorporated promptly. This approach not only reduces the risk of project failure but also fosters a sense of satisfaction and motivation among team members and stakeholders.
Overall, the article reinforces my belief that the Agile system development model offers significant advantages over traditional waterfall methods. Its collaborative nature, adaptability to change, and emphasis on iterative progress make it well-suited for today's dynamic and fast-paced software development landscape. Adopting Agile principles and practices can enhance project success rates, improve customer satisfaction, and empower development teams to deliver high-quality software that aligns with evolving user needs.
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You make a deposit now into an account earning 6% annually in return for a payment of 250 at the end of each of the next 8 years. What should you deposit today?
To deposit today into an account earning 6% annually in return for a payment of 250 at the end of each of the next 8 years, you should deposit 1,731.43 USD.
The present value of an annuity is the sum of the present values of the individual payments. In this case, the individual payments are 250 USD, and they are made 8 years apart.
The interest rate is 6%, so the present value of each payment is
[tex]250 / (1 + 0.06)^8.[/tex]
The total present value of the annuity is
[tex]8 * (250 / (1 + 0.06)^8) = 1,731.43[/tex] USD.
Therefore, you should deposit 1,731.43 USD today in order to receive the 250 USD payments at the end of each of the next 8 years.
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To deposit today into an account earning 6% annually in return for a payment of 250 at the end of each of the next 8 years, you should deposit 1,731.43 USD.
The present value of an annuity is the sum of the present values of the individual payments. In this case, the individual payments are 250 USD, and they are made 8 years apart.
The interest rate is 6%, so the present value of each payment is
The total present value of the annuity is
USD.
Therefore, you should deposit 1,731.43 USD today in order to receive the 250 USD payments at the end of each of the next 8 years.
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Most of Dell Inc. revenue was generated by selling personal computers (PCs) to consumers rather than tablets and smartphones during 2012. As such, Dell Inc. suffered from the error of ________.
A) underpositioning
B) doubtful positioning
C) overpositioning
D) confused positioning
E) repositioning
By not focusing on selling or developing tablets and smartphones, Dell Inc. had positioned itself inaccurately, which led to a confused brand identity and messaging. Therefore, Dell Inc. suffered from the error of "confused positioning."The correct answer is option D) Confused positioning.
The error suffered by Dell Inc. due to generating most of its revenue through personal computers rather than tablets and smartphones during 2012 was of "confused positioning."What is Confused Positioning?Confused positioning is a term that refers to a marketing and branding error that arises when a company's messaging or marketing campaigns are inconsistent, unclear, or misleading to its target market. As a result, the target market is confused about the company's products, services, or brand identity.The confused positioning error occurred in Dell's case as the company primarily generated its revenue from personal computers rather than tablets and smartphones, indicating that Dell Inc. had failed to position itself in the market adequately. By not focusing on selling or developing tablets and smartphones, Dell Inc. had positioned itself inaccurately, which led to a confused brand identity and messaging. Therefore, Dell Inc. suffered from the error of "confused positioning."The correct answer is option D) Confused positioning.
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3. You've been house shopping and aren't sure how big a house you can afford. You figure you can handle monthly mortgage payments of $1,250 and you can get a 30-year loan with an APR of 6.5 percent compounded monthly. How big of a mortgage can you afford? In this problem, you are solving for PV, which is the amount of money you can borrow today
Answer: The amount of mortgage that we can afford is $193,255.56.
In the given problem, we have to find out how big a house we can afford when the monthly mortgage payment is $1,250 and the 30-year loan has an APR of 6.5% compounded monthly.
We are required to calculate the amount of money that we can borrow today, i.e. PV.
PV, which is the amount of money that we can borrow today is calculated using the following formula:
PV = PMT x { [1 - (1 / (1 + r)n)] / r}, where
PMT = Monthly mortgage payment= $1,250
r = Monthly interest rate= APR / 12
= 6.5% / 12= 0.0054166667
n = Total number of monthly payments
= 30 x 12= 360
Substituting the given values in the formula,
we get:
PV = $1,250 x { [1 - (1 / (1 + 0.0054166667)360)] / 0.0054166667}
PV = $193,255.56
Therefore, the amount of mortgage that we can afford is $193,255.56.
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The ________ the nominal interest rate, the ________ is the quantity of money demanded.
1.
lower; smaller
2.
None of the above because the nominal interest rate does not influence the quantity of money demanded.
3.
lower; greater
4.
more variable; smaller
5.
higher; greater
The lower the nominal interest rate, the greater is the quantity of money demanded. This is the answer to the question. In other words, the demand for money is inversely proportional to the nominal interest rate.
This can be explained in the following manner: When the nominal interest rate is lower, people tend to hold onto less money because the opportunity cost of holding cash in their accounts becomes less expensive. This leads to an increase in the demand for money, since people are more likely to invest in other things, such as stocks and bonds, or use their money to purchase goods and services. As a result, when the nominal interest rate is lower, the quantity of money demanded is greater. In conclusion, the relationship between the nominal interest rate and the quantity of money demanded is an inverse one: as the nominal interest rate falls, the quantity of money demanded rises. Therefore, option 3 is the correct answer.
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