To determine the cost of units transferred out, you need to multiply the number of units transferred to the next department by the cost per equivalent unit.
In the given scenario, the equivalent units of production for materials and conversion are provided as 11,080 and 11,040, respectively. The cost per equivalent unit is calculated as $25.70 for materials and $66.30 for conversion.
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As a salesperson for Monteral Satellites, you sell television satellite dishes for homes, apartments, and businesses. After installing a satellite in Jeff Sager's home, you ask him for a referral. Jeff suggests you contact Tom Butler, his brother-in-law.
Mr. Butler is a well-known architect who designs and constructs unique residential homes. Your objective is to sell Mr. Butler a satellite for his office and home in hopes that he will install them in the homes he builds. Certainly, he is a center of influence, and a good word from him to his customers could result in numerous sales. Thus, another objective is to obtain referrals from Mr. Bulter.
After eight attempts, you now have Mr. Butler on the telephone. What would you say in order to get an appointment and set the stage for getting referrals?
You get the appointment and are now in Mr. Butler's office trying to get him to buy a satellite for his home and office. Sometime during the presentation you are going to ask for a referral. What would you say?
Mr. Butler buys a satellite for his home but not his office. You install the satellite yourself and then spend 15 minutes showing Mr. and Mrs. Butler and their two teenagers how to use it. Before you leave, how would you ask for a referral?
Three months after the installation you are talking to Mr. Butler. How would you ask for a referral?
As a salesperson for Monteral Satellites, you successfully secure an appointment with Mr. Tom Butler, a well-known architect. During the appointment, you aim to sell him a satellite for his home and office while also obtaining referrals from him.
In order to secure an appointment with Mr. Butler and set the stage for obtaining referrals, you could mention that you were referred to him by his brother-in-law, Jeff Sager, who recently had a satellite installed in his home. Emphasize the positive experience and benefits Jeff has received, highlighting the potential for Mr. Butler to enhance his own lifestyle and provide added value to his clients by incorporating satellite technology in the homes he designs and constructs. Express your eagerness to discuss this opportunity with him further during an in-person meeting, where you can delve into the details and showcase the possibilities.
During the presentation at Mr. Butler's office, as you discuss the benefits and features of the satellite, you can mention that many of his clients would likely appreciate the convenience and entertainment options it provides. Towards the end of the presentation, express your appreciation for Mr. Butler's interest in the satellite for his home and inquire if he knows any colleagues, clients, or friends who might also benefit from this technology. Request his assistance in providing referrals and assure him that you will offer the same excellent service and support to anyone he recommends.
When the installation at Mr. Butler's home is complete and you have finished showing him and his family how to use the satellite, you can tactfully ask for a referral by saying something like, "Mr. Butler, I'm glad to see that you and your family are excited about your new satellite. We strive to provide excellent service to our customers, and I'm confident that we could provide the same level of satisfaction to anyone you might recommend. Do you happen to know anyone who would also benefit from having a satellite installed in their home? Your referral would mean a lot to us." By acknowledging his satisfaction and seeking his help in spreading the word, you create an opportunity for Mr. Butler to contribute to your business through referrals.
Three months after the installation, when speaking to Mr. Butler, you can express gratitude for his previous purchase and ask about his satisfaction with the satellite. Once he confirms his satisfaction, you can smoothly transition into asking for a referral by saying, "Mr. Butler, I'm thrilled to hear that you're enjoying the benefits of the satellite. As an architect, your recommendation holds great influence, and I was wondering if there's anyone in your network who could benefit from our services. Your endorsement would mean a lot to us, and we would ensure that anyone you refer receives the same exceptional service you received." By acknowledging his professional influence and the impact his recommendation could have, you demonstrate the importance of his referral while also assuring him of your commitment to providing top-notch service.
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Ferdinand Construction (FC) manages the design and construction of hospitals. Ferdinand has developed several formulas that it uses to quote jobs. These include costs of basic construction but exclude equipment and furniture. These estimates are also dependent on the purpose of the hospital (teaching hospitals are more costly to build) and location (downtown hospitals are more costly to build). Both of these are based on the building costs. The estimated costs also depend on whether the hospital has few or many stories (high-rise buildings are more expensive). The following are the cost estimates for one region in the Northeast:
Design costs $ 15,000,000
Building costs – per square foot (low-rise) 300
Building costs – per square foot (high-rise) 360
Downtown premium 60%
Teaching hospital premium 20%
Ferdinand Construction (FC) manages the design and construction of hospitals. Ferdinand has developed several formulas that it uses to quote jobs. These include costs of basic construction but exclude equipment and furniture.
These estimates are also dependent on the purpose of the hospital (teaching hospitals are more costly to build) and location (downtown hospitals are more costly to build). Both of these are based on the building costs. The estimated costs also depend on whether the hospital has few or many stories (high-rise buildings are more expensive).
The following are the cost estimates for one region in the Northeast: Design costs $15,000,000Building costs – per square foot (low-rise) $300Building costs – per square foot (high-rise) $360Downtown premium 60%Teaching hospital premium 20%To calculate the cost of the building of the hospital in the Northeast, we need to follow the following steps: Step 1: First, we will calculate the building cost for a low-rise hospital For this, we will multiply the building cost per square foot with the number of square feet.
Step 4: Next, we will calculate the teaching hospital premium which is 20% of the total cost of construction (including downtown premium) of low-rise or high-rise hospitals So, teaching hospital premium on a low-rise hospital = 20% of [tex]($45,000,000 + $27,000,000)= 20/100 × $72,000,000= $14,400,000[/tex]And, teaching hospital premium on a high-rise hospital =[tex]20% of ($54,000,000 + $32,400,000)= 20/100 × $86,400,000= $17,280,000[/tex]Step 5: Finally, we will add the design cost with the total cost of construction (including downtown premium and teaching hospital premium) of low-rise or high-rise hospitals to get the total estimated cost of the hospital for the Northeast region. So, the total estimated cost of the low-rise hospital for the Northeast region = [tex]$15,000,000 + $45,000,000 + $27,000,000 + $14,400,000= $101,400,000[/tex]And, the total estimated cost of the high-rise hospital for the Northeast region = [tex]$15,000,000 + $54,000,000 + $32,400,000 + $17,280,000= $118,680,000.[/tex]
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What led to the Cuban Missile Crisis, and what did the US give
up to resolve it?
To resolve the Cuban Missile crisis, the US made a secret agreement with the Soviet Union, agreeing to remove US missiles from Turkey in exchange for the withdrawal of Soviet missiles from Cuba.
The Cuban Missile Crisis occurred in October 1962 when the United States discovered that the Soviet Union had deployed nuclear missiles in Cuba. This discovery was seen as a direct threat to US national security as the missiles had the capability to reach major US cities. The crisis escalated tensions between the two superpowers, and there was a real risk of nuclear war.
In order to resolve the crisis and avoid a potential catastrophic conflict, the US and the Soviet Union engaged in diplomatic negotiations. In secret, a deal was made between President John F. Kennedy and Soviet Premier Nikita Khrushchev. The US agreed to remove its Jupiter missiles, which were stationed in Turkey near the Soviet Union's borders. In exchange, the Soviet Union agreed to dismantle and remove the nuclear missiles from Cuba. This agreement, known as the Turkey-Cuba Missile Crisis deal, was crucial in defusing the immediate crisis and preventing further escalation of tensions between the two nations.
By giving up its missiles in Turkey, the US was able to secure the removal of Soviet missiles from Cuba, thus eliminating the immediate threat to its territory. The resolution of the crisis marked a significant turning point in US-Soviet relations and highlighted the importance of diplomacy and negotiation in resolving conflicts.
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BigCo is buying LittleCo, and they are paying in shares. BigCo has levered cash flows of $400,000 per year in perpetuity, 5000 shares outstanding, and a levered cost of equity of 13%. LittleCo has levered cash flows of $75,000 per year in perpetuity, 1000 shares outstanding, and a pre-merger levered cost of equity of 19%. After the merger, BigCo can share their risk management expertise and access to capital markets with LittleCo, dropping their cost of levered equity to the same level as BigCo's. If BigCo wants to give LittleCo shareholders 20% of the synergies, how many new shares should they issue to compensate LittleCo shareholders? b) What are two reasons that BigCo might have chosen to pay in shares? If you were a LittleCo shareholder, would the way BigCo chose to pay make you more or less optimistic about the merger's prospects for success? a) b) variant a) You are considering a project that will cost $750,000 in upfront costs and will produce $90,000 per year in EBIT for the next 15 years. This project will be financed with 60% debt, 40% equity. You can borrow at 5.5% and pay a corporate tax rate of 28%. The asset beta for this project is 0.6, the riskless rate is 3%, and the expected return on an index fund is 16%. What is the NPV of this project, using the WACC method? b) Assuming all cash flows are perpetual, under what circumstances would you expect the FTE method to reject a project that the APV method would accept? What serious problem could this cause for a firm?
The FTE method would reject a project that the APV method would accept when the project has asymmetric cash flows, such as where the cash inflows come sooner than the cash outflows. This can cause the FTE method to undervalue the tax shield, resulting in a lower NPV than the APV method. This can be a serious problem for a firm as it can lead to rejecting potentially profitable projects or accepting unprofitable ones, which can reduce shareholder value and lead to a loss of opportunities.
a) The new shares that BigCo should issue to compensate LittleCo shareholders are 667 shares.The total levered cash flows of BigCo after the merger would be $475,000 per year, while the total levered cash flows of LittleCo would be $75,000 per year. BigCo will provide 20% of this total $550,000 as synergies to the LittleCo shareholders.
The synergies will be $110,000, of which 20% would be $22,000. LittleCo shareholders will be compensated for $22,000 in new shares. The total number of shares after the merger would be 6000.BigCo may have chosen to pay in shares for several reasons.
Firstly, BigCo may have been willing to pay shares rather than cash because it could raise capital at a lower cost than LittleCo. Alternatively, BigCo may have thought that issuing new shares would be a more tax-efficient way to finance the acquisition than borrowing.
Lastly, BigCo may have thought that by issuing new shares to LittleCo shareholders, it would make them feel more valued and increase their confidence in the merger's success.
If I were a LittleCo shareholder, the way BigCo chose to pay would make me more optimistic about the merger's prospects for success.
It shows that BigCo is interested in creating a long-term partnership with LittleCo and is willing to provide a stake in its success. It also shows that BigCo is willing to share its expertise in risk management and access to capital markets, which can help LittleCo grow and become more profitable.
b) The NPV of the project using the WACC method is $204,514.60.
WACC = (Wd x Rd x (1-T)) + (We x Re)
Wd= 60%
debt = $450,000
We = 40%
equity = $300,000
Rd = 5.5%
corporate tax rate = 28%
T = 1 - 0.28
= 0.72
Re = 3% + 0.6(16% - 3%)
= 11.8%
WACC = (0.6 x 5.5% x (1 - 0.28)) + (0.4 x 11.8%)
= 8.56%
NPV = ΣCFt / (1 + WACC)t - I0
= $204,514.60
Where CFt = EBIT(1 - T) + Depreciation - Capital Expenditureb)
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Which of the following statements is TRUE: Given a market with standard demand and supply curves, if a consumer's willingnessto-pay is greater than a supplier's cost, there will be no transaction between them in equilibrium a transaction between them will increase total surplus a transaction between them cannot increase both consumer and producer surplus a transaction between them will always increase both consumer and producer surplus equally
The true statement among the given options is: "A transaction between them cannot increase both consumer and producer surplus"
In a market with standard demand and supply curves, a transaction between a consumer and a supplier can lead to an increase in either consumer surplus or producer surplus, but not both simultaneously. When a consumer's willingness to pay (WTP) exceeds a supplier's cost, it implies that there is potential for a transaction to occur. However, the actual surplus gained from the transaction depends on the specific price at which the transaction takes place.
If the transaction occurs at a price that is lower than the consumer's WTP but higher than the supplier's cost, it will increase consumer surplus but reduce producer surplus. On the other hand, if the transaction occurs at a price that is higher than the supplier's cost but lower than the consumer's WTP, it will increase producer surplus but reduce consumer surplus.
Therefore, it is not possible for a transaction between a consumer and a supplier to increase both consumer and producer surplus simultaneously in equilibrium. The actual impact on surplus depends on the specific terms of the transaction, including the price at which it takes place.
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What is the capital asset pricing model, or CAPM? What does it tell us about the required return on a risky investment? 4 marks. b) What is the main difference between a stock dividend and a stock split? 2 marks e) Briefly discuss the three main uses into which a firm may put its buyback, or repurchased stocks. 3 marks. d) Briefly discuss any five key factors to be considered when choosing a venture capitalist.
a) The Capital Asset Pricing Model (CAPM) is a financial model that helps investors calculate the expected return on an investment based on the risk-free rate, the market rate of return, and the asset's beta.
b) The main difference between a stock dividend and a stock split is that a stock dividend involves the distribution of additional shares of stock to existing shareholders, while a stock split involves dividing each existing share of stock into multiple shares
e) The three main uses for a firm's buyback or repurchased stocks are:
To provide a tax-efficient way to return capital to shareholders
To improve financial ratios such as earnings per share and return on equity
To signal confidence in the company's future performance a
d) When choosing a venture capitalist, some key factors to consider include their industry experience, their track record of successful investments, their investment strategy and approach, the value they can bring beyond just funding (such as industry connections and expertise)
a) The Capital Asset Pricing Model (CAPM) is a financial model that helps investors calculate the expected return on an investment based on the risk-free rate, the market rate of return, and the asset's beta. The model assumes that investors require additional compensation for taking on risk and that the expected return of an asset should increase with its level of risk.
b) The main difference between a stock dividend and a stock split is that a stock dividend involves the distribution of additional shares of stock to existing shareholders, while a stock split involves dividing each existing share of stock into multiple shares. A stock dividend does not change the overall value of the shareholder's investment, while a stock split increases the number of shares outstanding but reduces the price per share.
e) The three main uses for a firm's buyback or repurchased stocks are:
To provide a tax-efficient way to return capital to shareholders
To improve financial ratios such as earnings per share and return on equity
To signal confidence in the company's future performance and potentially boost investor sentiment
d) When choosing a venture capitalist, some key factors to consider include their industry experience, their track record of successful investments, their investment strategy and approach, the value they can bring beyond just funding (such as industry connections and expertise), and their alignment with the goals and vision of the company seeking funding. Other important factors may include the size of their fund and their willingness to provide follow-on funding as needed.
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Mountain Drycleaners started 2024 with total assets of $19,000 and total liabilities of $14,000. At the end of 2024, Mountain's total assets stood at $12,000 and total liabilities were $9,000. Requirements 1. Did the owner's equity of Mountain Drycleaners increase or decrease during 2024 ? By how much? 2. Identify the four possible reasons that owner's equity can change. Requirement 1. Did the owner's equity of Mountain Drycleaners increase or decrease during 2024 ? By how much? (Enter a decrease with a minus sign or parentheses.) The change in owner's equity during the year is Requirement 2. Identify the four possible reasons that owner's equity can change.
The given problem is about Mountain Drycleaners, a small business that started with a total asset of $19,000 and total liabilities of $14,000 in the year 2024. By the end of 2024, the total assets were $12,000 and the total liabilities were $9,000.
The problem demands the changes that took place in the owner's equity in the given period. Requirements1. Did the owner's equity of Mountain Drycleaners increase or decrease during 2024? By how much? The owner's equity of Mountain Drycleaners decreased during 2024.
It decreased by $8,000. This is because of the following calculation: At the start of the year 2024, Total Assets - Total Liabilities = Owner's Equity$19,000 - $14,000 = $5,000And at the end of the year 2024, Total Assets - Total Liabilities = Owner's Equity$12,000 - $9,000 = $3,000 The change in Owner's Equity = $3,000 - $5,000 = -$2,000
Thus, there was a decrease in the owner's equity of Mountain Drycleaners by $2,000.2. Identify the four possible reasons that owner's equity can change.
The four possible reasons that can lead to a change in Owner's Equity are Revenue and gains: Revenue and gains increase the owner's equity and profits of a business.
It includes revenues from sales, interest income, and other income sources. Expenses and losses: Expenses and losses decrease the owner's equity.
It includes expenses such as salaries, rent, interest expense, taxes, and losses on sales of assets. Capital investments: An owner can invest personal funds into the business, which increases the owner's equity.
Drawing or withdrawals: If an owner draws money from the business, then the owner's equity decreases as there are fewer funds left in the business.
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Which of the following indices are (is) price weighted? 1. NASDAQ Composite II. Dow Jones Industrial Average III. S\&P500 IV. NYSE Composite II only I. II, III, and IV Ionly land If only
The correct answer is "II only." The Dow Jones Industrial Average (DJIA) is a price-weighted index.
It means that the components of the index are weighted based on their stock prices, rather than their market capitalization or any other factor. The DJIA is calculated by adding up the stock prices of the 30 component companies and dividing the sum by a divisor to determine the index value.
The other indices listed, such as the NASDAQ Composite, S&P 500, and NYSE Composite, are not price-weighted. The NASDAQ Composite is a market-value-weighted index, which means it is based on the total market value of the component securities. The S&P 500 is also a market-value-weighted index, representing the 500 largest publicly traded companies in the United States. The NYSE Composite is a broad-based index that includes all common stocks listed on the New York Stock Exchange and is also market-value-weighted.
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Suppose a project is expected to earn you $6,000 in dividends each quarter for the next 8 years. If the appropriate discount rate is 10%, how much is this investment worth today? Round to two decimal places: Type yout numeric antwer and submit
The amount of investment worth today is $4,986.11. Rounded to two decimal places, the answer is $4,986.11.
To find out the amount of investment worth today, we need to calculate the present value of the investment. Given the following, Dividend per quarter = $6,000Number of years = 8 Appropriate discount rate = 10%Using the formula for the present value of an annuity, we can calculate the amount of investment worth today as follows: PV = A × [1 - (1 + r)-n / r]where PV = present value A = dividend per quarter = appropriate discount rate n = number of quarters in 8 years = 32Putting the values, we get
PV = $6,000 × [1 - (1 + 0.10)-32 / 0.10]
PV = $6,000 × [1 - 0.169]
PV= $6,000 × 0.831
PV= $4,986.11.
Therefore, the amount of investment worth today is $4,986.11. Rounded to two decimal places, the answer is $4,986.11.
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Required Information Determine 10\%-per-year present worth (PW) of taxes over a 6-year study period. P=$100,S=0,G1−0E=$50, and T e
=30% Use stralght line method to determine the present worth (PW) of the tax with n=4 years. The PW of taxes is determined to be $
The present worth (PW) of taxes over the 6-year study period is $43.55.
To calculate the present worth (PW) of taxes over a 6-year study period, we need to determine the annual tax payment and then discount each payment to its present value.
Given:
P = $100 (tax payment per year)
S = 0 (start year, assuming taxes start immediately)
G1−0E = $50 (end year, assuming taxes end after 6 years)
Te = 30% (tax rate)
We can calculate the annual tax payment using the straight-line method:
Annual Tax Payment = (G1−0E - S) / (n - 1)
= ($50 - $0) / (6 - 1)
= $10 per year
Next, we will discount each annual tax payment to its present value using a 10% discount rate:
Year 1: PV = $10 / (1 + 0.10)^1 = $9.09
Year 2: PV = $10 / (1 + 0.10)^2 = $8.26
Year 3: PV = $10 / (1 + 0.10)^3 = $7.51
Year 4: PV = $10 / (1 + 0.10)^4 = $6.83
Year 5: PV = $10 / (1 + 0.10)^5 = $6.21
Year 6: PV = $10 / (1 + 0.10)^6 = $5.65
Finally, we sum up the present values of all the tax payments to find the total present worth (PW) of taxes over the 6-year study period:
PW of Taxes = $9.09 + $8.26 + $7.51 + $6.83 + $6.21 + $5.65
= $43.55
Therefore, the present worth (PW) of taxes over the 6-year study period is $43.55.
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As a major decision-maker in your organization you chose to invest in a new accounting software: You find a supplier who can create a custom product to get "just the right fit". It turns the creation process is more complex than you anticipated and the cost is well beyond your budget. There are several products you could purchase off the shelf that do similar things, but aren't perfect. Please choose an example of Escalation of Commitment from the list below Select one: a. You have the supplier continue their work until you get the right product (you know they can get the final product will be worth it) b. You ask the supplier to stop all further creation and you use the product they have prepared to- c. You decided that you actually don't need accounting software and decide to use paper general instead d. You scrap the original plan and go with a different product off the shelf that will mostly do the cheaper
The example of Escalation of Commitment from the given options is: a. You have the supplier continue their work until you get the right product (you know they can get the final product will be worth it)
Escalation of Commitment refers to the tendency to continue investing resources (such as time, money, or effort) into a failing course of action, despite evidence indicating it may not be the best decision. In this scenario, choosing option (a) exemplifies escalation of commitment. Despite the complexity and cost exceeding the budget, the decision-maker persists with the custom product, believing that the final outcome will justify the investment. This decision may stem from the desire to attain the ideal solution or the fear of wasting the resources already devoted to the project.
Option (a) reflects a continuation of the initial plan, disregarding the potential availability of off-the-shelf products that could fulfill most requirements at a lower cost.
The decision to persist with the custom product despite its drawbacks demonstrates a commitment to the initial investment, even when more practical alternatives exist.
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businessfinancefinance questions and answersmichael and janet enter into a contract where janet promises to work in michael’s museum. an accidental fire, that is not the fault of either michael or janet, burns michael’s museum down after the contract is formed, but before janet starts. as a result, michael's museum is required to close. which of the following is correct? select one: a. as theQuestion: Michael And Janet Enter Into A Contract Where Janet Promises To Work In Michael’s Museum. An Accidental Fire, That Is Not The Fault Of Either Michael Or Janet, Burns Michael’s Museum Down After The Contract Is Formed, But Before Janet Starts. As A Result, Michael's Museum Is Required To Close. Which Of The Following Is CORRECT? Select One: A. As The
Michael and Janet enter into a contract where Janet promises to work in Michael’s museum. An accidental fire, that is not the fault of either Michael or Janet, burns Michael’s museum down after the contract is formed, but before Janet starts. As a result, Michael's museum is required to close. Which of the following is CORRECT?
Select one:
a.
As the subject-matter of the contract (the museum) has been destroyed before performance was due, this amounts to a frustrating event, and the contract is automatically terminated.
b.
Michael has a duty to mitigate his losses, so he must find an alternative museum facility for Janet to work in immediately.
c.
Since the fire occurs at Michael’s museum, he will have to bear the full responsibility of not being able to honour his contract with Janet, regardless of whether the fire was his fault or not.
d.
Museum fires are reasonably foreseeable, therefore the fire does not amount to a frustrating event.
The correct answer to the question is (A) "Michael and Janet enter into a contract where Janet promises to work in Michael’s museum."
An accidental fire, that is not the fault of either Michael or Janet, burns Michael’s museum down after the contract is formed, but before Janet starts. As a result, Michael's museum is required to close.
As the subject matter of the contract (the museum) has been destroyed before the performance was due, this amounts to a frustrating event, and the contract is automatically terminated.
A frustrating event or a supervening event is something that occurs after a contract is signed that makes it impossible to fulfill the terms of the contract.
The contract becomes impossible to perform when a fire destroys Michael's museum, which is the subject of the contract before Janet begins working in it.
As a result, the contract is terminated because the subject matter of the contract has been destroyed before the performance was due.
Therefore, Option A is correct.
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Information related to Tamarisk, Inc. is presented below. 1. On April 5, purchased merchandise on account from Culver Company for $26,600, terms 2/10, net/30, FOB shipping point. 2. On April 6, paid freight costs of $500 on merchandise purchased from Culver. 3. On April 7, purchased equipment on account for $31,400. 4. On April 8 , returned $3,400 of merchandise to Culver Company. 5. On April 15, paid the amount due to Culver Company in full. Prepare the journal entries to record these transactions on the books of Tamarisk, Inc. under a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Tamarisk, inc.is responsible for the freight costs.
here are the journal entries to record the transactions on the books of tamarisk, inc. under a perpetual inventory system:
1. on april 5, purchased merchandise on account from culver company for $26,600, terms 2/10, net/30, fob shipping point.
date account debit credit
------------------------------------------------------
apr 5 merchandise inventory $26,600
accounts payable $26,600
2. on april 6, paid freight costs of $500 on merchandise purchased from culver.
date account debit credit
------------------------------------------------------
apr 6 freight expense $500
cash $500
3. on april 7, purchased equipment on account for $31,400.
date account debit credit
------------------------------------------------------
apr 7 equipment $31,400
accounts payable $31,400
4. on april 8, returned $3,400 of merchandise to culver company.
date account debit credit
------------------------------------------------------
apr 8 accounts payable $3,400
merchandise inventory $3,400
5. on april 15, paid the amount due to culver company in full.
date account debit credit
------------------------------------------------------
apr 15 accounts payable $23,200
cash $23,200
note: the terms "fob shipping point" indicate that the buyer (tamarisk, inc.) takes ownership of the merchandise when it is shipped, and
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A firm has a profit margin of 2% and an equity multiplier of 2.5. Its sales are $230 million, and it has total assets of $92 million. What is its ROE? Do not round intermediate calculations. Round your answer to two decimal places. %
The value of return on equity (ROE) is 12.5%.
Given that:
Profit Margin = 2%
Equity Multiplier = 2.5
Sales = $230 million
Total Assets = $92 million.
To determine the ROE, first we have to calculate the return on assets (ROA) and then use it to find out the ROE.
ROA = Net Income/Total Assets.
Using the profit margin formula.
Profit Margin = Net Income/Sales
Net Income = Profit Margin * Sales
= 2/100 * 230 million
= $4.6 million
Therefore,
ROA = $4.6 million/$92 million
= 0.05 or 5%
To find ROE;
ROE = ROA * Equity Multiplier
ROE = 0.05 * 2.5
= 0.125 or 12.5%.
Hence, the return on equity (ROE) is 12.5%.
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Tailoring products or services to the tastes of individual customers on a high-volume scale is referred to as family branding. mass customization. product differentiation. economies of scale marketing. build-to-order. QUESTION 14 Usage rate is the percentage of total possible users divided by the total number of consumers who actually use a product or service. the number of times a customer uses or recommends a product or service annually. quantity consumed or patronage (store visits) during a specific period. the maximum number of times a customer has used a product or service historically. the profits a firm earns from customers who consume a particular product or service. QUESTION 15 To be identified as a market segment, members of the group must be similar in terms of their consumption behavior. represent a large share of the entire market and have buying power. have diverse needs and have potential for future growth. have diverse needs and be willing and able to purchase the product. have the potential for future growth antd increased profit or ROI. Personality and lifestyle are both variables used to employ segmentation. geographic behavioral attitudinal psychographic demographic QUESTION 18 All of these are reasons to segment a market EXCEPT which of the following? The ability to assign buyers to a segment is simple and cost-effective. It would cause an increase in market share or profit. All the buyers in the entire market have similar wants and needs. There is a potential marketing action to reach it. There are different wants and needs of buyers in the entire market. QUESTION 19 The best segmentation approach for business firms is the one that makes it easiest to reach the segment. maximizes the opportunity for future profit and ROI. differs from the most common approach within the industry. creates awareness among potential buyers within a segment. is simplest and least costly in assigning potential buyers to segments. QUESTION 20 When Ann Taylor, a well-known retailer of sophisticated women's clothing, started losing sales to its own LOFT stores that feature moderately priced casual clothes, Ann Taylor was dealing phenomenon known as amortization. guerrilla marketing. shrinkage. marketing Darwinism. cannibalization. Click Save and Submit to save and submit. Click Save All Answers to save all answers.
Mass customization.
Have diverse needs and be willing and able to purchase the product.
All the buyers in the entire market have similar wants and needs.
Maximizes the opportunity for future profit and ROI.
Cannibalization.
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I evaluate starting a business. I believe that I will make $14,500 in year 1, $10,000 in year 2, $6,500 in year 3, and $4,000 in year 4. I believe for a risky project like this I should get at least a 13.5% return. What is the most I should be willing to invest (PV)?
(b) If I had to only invest $18500, what rate of return would I receive?
The most you should be willing to invest (PV) in the business is approximately $23,081.95 and If you invest $18,500, you can expect a rate of return of approximately 18.34%.
To determine the most you should be willing to invest (PV) in the business, we need to calculate the present value of the expected cash flows using the desired rate of return.
Year 1: $14,500
Year 2: $10,000
Year 3: $6,500
Year 4: $4,000
Rate of return: 13.5%
The formula to calculate present value is:
PV = CF1 / (1 + r)^1 + CF2 / (1 + r)^2 + CF3 / (1 + r)^3 + CF4 / (1 + r)^4
Where PV is the present value, CF is the cash flow, r is the discount rate, and the numbers in the superscript represent the year.
Substituting the given values, we have:
PV = $14,500 / (1 + 0.135)^1 + $10,000 / (1 + 0.135)^2 + $6,500 / (1 + 0.135)^3 + $4,000 / (1 + 0.135)^4
Calculating this expression, the present value (PV) is approximately $23,081.95.
Therefore, the most you should be willing to invest (PV) in the business is approximately $23,081.95.
b. If you are only willing to invest $18,500, we can rearrange the present value formula to solve for the rate of return (r):
$18,500 = $14,500 / (1 + r)^1 + $10,000 / (1 + r)^2 + $6,500 / (1 + r)^3 + $4,000 / (1 + r)^4
This equation cannot be solved analytically. However, you can use trial and error or numerical methods to find the rate of return (r) that satisfies this equation. Using a financial calculator or software, you can find that the rate of return would be approximately 18.34%.
Therefore, if you invest $18,500, you can expect a rate of return of approximately 18.34%.
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Case 1 Break-Even Analysis; Hospital CVP Relationships Delaware Medical Center operates a general hospital. The medical center also rents space and beds to separately owned entities rendering specialized services, such as Pediatrics and Psychiatric Care. Delaware charges each separate entity for common services, such as patients' meals and laundry, and for administrative services, such as billings and collections. Space and bed rentals are fixed charges for the year, based on bed capacity rented to each entity. Delaware Medical Center charged the following costs to Pediatrics for the year ended June 30, 20x1: During the year ended June 30,20×1, Pediatrics charged each patient an average of $300 per day, had a capacity of 60 beds, and had revenue of $6 million for 365 days. In addition, Pediatrics directly employed personnel with the following annual salary costs per employee: supervising nurses, $25,000; nurses, $20,000; and aides, $9,000. During the year ended June 30,20×2, Pediatrics had 60 rented beds. Assume that one year is 365 days throughout the case. Therefore, Pediatrics' maximum capacity (capacity of fully utilizing all beds 100% ) was 21,900 patient days ( 365 days* 60 beds). However, in this year, the department had18,500 patient days. Delaware Medical Center has the following minimum departmental personnel requirements, based on total annual patient days: Pediatrics always employs only the minimum number of required personnel. Salaries of supervising nurses, nurses, and aides are therefore fixed within ranges of annual patient days. For the upcoming year ending June 30, 20x3, the Department will be able to obtain additional patient days. If that happens, the department will obtain exactly 2,400 additional capacity in terms of patient days at a cost of $720,000. Additional patient days will be either 0 or 2,400 . Required: 1. Make a contribution format income statement for the year ended June 30,20×2. Revenue per patient day, cost per patient day, cost per bed, and salary rates remain the same as for the year ended June 30,20×1.
Contribution format income statement for the year ended June 30, 20x2 is given below:ParticularsAmount($)Amount($)Sales$6,000,000Less.
Variable CostsDirect materials$0Direct labor$0Variable overheads$0Variable cost per bed$240Total Variable Costs$(4,440,000)Contribution margin$1,560,000Less: Fixed CostsFixed overheads$1,200,000Fixed cost per bed$20,000Supervising nurses$300,000Nurses$2,400,000Aides$1,260,000Total Fixed Costs$(5,180,000)Net Income$(3,620,000)Calculation of variable cost per bed.
Variable cost per bed= Total variable cost / Total bed capacity= $4,440,000 / 18,500 beds= $240Calculation of fixed cost per bed:Fixed cost per bed= Total fixed cost / Total bed capacity= $5,180,000 / 60 beds= $20,000Revenue per patient day= Sales / Patient days= $6,000,000 / 18,500 patient days= $324Cost per patient day= Total cost / Patient days= ($4,440,000 + $5,180,000) / 18,500 patient days= $580Contribution margin per patient day= Revenue per patient day - Cost per patient day= $324 - $580= ($256).
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The contribution format income statement for the year ended June 30, 20x2 is as follows:Revenue = $6,007,960Variable cost = $3,517,926Fixed cost = $1,115,000Net Income = $1,375,034.
Contribution Format Income Statement for the year ended June 30, 20x2:Revenue:Calculation of revenue per patient day:Average revenue per patient day = Revenue / Total patient daysAverage revenue per patient day = $6,000,000 / 18,500Average revenue per patient day = $324.32Revenue from 60 beds for 365 days = Maximum capacity * Average revenue per patient dayRevenue from 60 beds for 365 days = 21,900 * $324.32 Revenue from 60 beds for 365 days = $7,096,188Calculation of total revenue:Revenue from 60 beds for 18,500 days = Revenue per patient day.
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You took a $700 cash advance by using checks linked to your credit card account. The bank charges you a 1% cash advance fee on the amount borrowed with no grace period on cash advances. How much money is required to pay off the balance in full after one month at 20% APR?
Answer:
To calculate the total amount required to pay off the balance in full after one month, we need to consider the cash advance fee, the borrowed amount, and the interest charges.
First, let's calculate the cash advance fee:
Cash advance fee = 1% of $700 = 0.01 * $700 = $7
Next, let's calculate the borrowed amount:
Borrowed amount = $700
Now, let's calculate the interest charges for one month:
Monthly interest rate = (Annual interest rate / 12) = (20% / 12) = 0.20 / 12 = 0.0167
Interest charges for one month = Monthly interest rate * Borrowed amount = 0.0167 * $700 = $11.69
Finally, let's calculate the total amount required to pay off the balance in full after one month:
Total amount = Borrowed amount + Cash advance fee + Interest charges
Total amount = $700 + $7 + $11.69 = $718.69
Therefore, you would need $718.69 to pay off the balance in full after one month at a 20% APR, considering the cash advance fee and no grace period on cash advances
The Jim Demello Company has annual sales of $3,500,000 and no depreciation. The common-size statement shows that EBIT is 70.2 percent of sales. What is the cost of goods sold (COGS) in dollars? $1,750,000 $2,106,000 COGS cannot be determined given this information $1,043,000 $920,000
The cost of goods sold (COGS) in dollars is $1,043,000.
The cost of goods sold (COGS) can be determined using the information given. Since EBIT is 70.2% of sales, we can calculate the operating income (EBIT) as follows:
EBIT = Sales - COGS
Rearranging the equation, we can solve for COGS:
COGS = Sales - EBIT
COGS = $3,500,000 - (70.2% * $3,500,000)
COGS = $3,500,000 - $2,457,000
COGS = $1,043,000
Therefore, the cost of goods sold (COGS) in dollars is $1,043,000.
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How do you plan to use the knowledge, facts, and theories you
learned in this class in your everyday life?
Ways in which individuals can apply the knowledge, facts, and theories they learn in a class to their everyday lives:
1. Problem-solving: The critical thinking skills developed through learning can be applied to various real-life situations, helping individuals analyze problems, evaluate options, and make informed decisions.
2. Communication: Effective communication skills learned in a class can be applied in personal and professional interactions, enabling individuals to express their ideas clearly, listen actively, and engage in meaningful conversations.
3. Decision-making: Learning about decision-making models and strategies can enhance an individual's ability to make sound choices, considering relevant factors, weighing pros and cons, and anticipating potential outcomes.
4. Time management: Understanding time management techniques can assist individuals in organizing their daily activities, setting priorities, and allocating time effectively to accomplish their goals.
5. Personal development: Learning about various subjects can contribute to personal growth and development, expanding knowledge, broadening perspectives, and fostering a continuous learning mindset.
6. Critical analysis: The ability to critically analyze information and distinguish between reliable sources and misinformation is valuable in everyday life, particularly in evaluating news, making informed consumer choices, and navigating the digital landscape.
7. Adaptability: Learning fosters adaptability, allowing individuals to stay updated with new technologies, trends, and developments in their fields, and adapt to changing circumstances and challenges.
Overall, the knowledge, facts, and theories learned in a class can empower individuals to approach their everyday lives with a deeper understanding, improved skills, and a broader perspective, facilitating personal growth, decision-making, and problem-solving.
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Q=4K .4
L .5
And which faces the following input prices: w=30,r=20. [Note: you can use your knowledge of C-D to calculate the slope of the isoquant] a) What is the minimum cost for the firm to produce 10 units of output? b) What is the maximum output that can be produced for $400 ? c) Calculate the long-run total cost function, marginal cost function, and average cost function. d) Now consider that the firm has 32 units of capital in the short-run. Calculate the short-run total cost function, the marginal cost function, and the average cost function. Draw the short-run marginal cost and short-run average cost curves (label any key points). e) For what level of output are the short-run cost functions equal to the long-run cost functions?
a) The minimum cost for the firm to produce 10 units of output is $80.
b) The maximum output that can be produced for $400 is 20 units.
c) The long-run total cost function is TC = 120Q. The marginal cost function is MC = 120. The average cost function is AC = 12.
d) The short-run total cost function is TC = 256Q + 400. The marginal cost function is MC = 256. The average cost function is AC = 25.6. The short-run marginal cost curve starts at $256 and the short-run average cost curve starts at $25.6.
e) The short-run cost functions are equal to the long-run cost functions when output is 20 units.
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Initially when you set-up your business, you did not know if it was going to succeed, so you set it up as a sole proprietorship. After several months success you revisit that decision and wonder if there is a better business form that you should switch to. You take into account the following details:
• You have personal assets including a beach houseand $150,000.00 in savings
• You have a day job earning $90,000.00 per year
Now that your business is a success, you want to do two things:
• Find a real estate agent to find you new premises
• Find a not-for-profit that your business can work with to further your sustainable development goals (SDGs)
You and your partner will answer the following questions in writing in your Adobe web page:
1. With reference to course material only, explain how your agency relationship will work with the real estate agent (2 marks)
2. A brief explanation for why this new business form is the best option. Your answer should reference at least three benefits of that business form given your business’ success, personal assets and income from your day job (3 marks)
• Please note in order to answer this, you must understand each of the different business forms, who is permitted to form them, and the pros and cons for each
The agency relationship with a real estate agent and a different business form might be the best option considering the business's success, personal assets, and income from a day job.
Agency Relationship with the Real Estate Agent: As a sole proprietorship, the owner acts as the principal and has a direct relationship with the real estate agent. The owner will engage the agent to find new premises for the business. The agent will act as the agent and owe fiduciary duties to the owner, such as loyalty, confidentiality, and acting in the best interest of the owner. The details of the agency relationship, including commission, terms, and responsibilities, should be established through a written agreement.
Best Option for Business Form: Given the business's success, personal assets, and income from a day job, a more suitable business form might be a limited liability company (LLC). The benefits of an LLC in this scenario are:
a) Limited Liability: An LLC provides personal asset protection, meaning the owner's personal assets, such as the beach house and savings, are generally shielded from business liabilities.
b) Tax Flexibility: LLCs offer flexibility in taxation, allowing the owner to choose between pass-through taxation (where profits and losses flow through to the owner's personal tax return) or being taxed as a corporation, depending on which option is more advantageous.
c) Credibility and Growth Potential: Operating as an LLC may enhance the business's credibility and attract potential partners, investors, or not-for-profit organizations for collaborations aligned with sustainable development goals (SDGs).
By forming an LLC, the owner can protect personal assets, optimize tax benefits, and establish a more formal and credible business structure. This form would provide a suitable platform to work with a real estate agent and collaborate with not-for-profit organizations to further their SDGs. It is important for the owner to consult with legal and tax professionals to fully understand the implications and requirements of forming an LLC and to ensure compliance with applicable laws and regulations.
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Martin and Janelle each own a burger restaurant. Martin can produce 5 burgers or 10 plates of fries in an hour. Janelle can produce 12 burgers or 12 plates of fries in an hour. Initially, Martin makes 4 burgers and 2 plates of fries each hour, while Janelle produces 6 burgers and 6 plates of fries each hour. If Martin and Janelle decide to specialize and trade: Martin should produce burgers and plates of fries. Janelle should produce burgers and plates of fries. Who benefits from making the deal to specialize and trade?
Both Martin and Janelle benefit from making the deal to specialize and trade as it allows them to optimize their production by focusing on their respective comparative advantages and exchanging the surplus products with each other.
To determine who benefits from specializing and trading, we need to compare the opportunity costs of producing burgers and plates of fries for each person. Opportunity cost refers to the value of the next best alternative that is forgone when a choice is made.
Martin's opportunity cost of producing 1 burger is 2 plates of fries (since he can produce 5 burgers or 10 plates of fries in an hour). Janelle's opportunity cost of producing 1 burger is 1 plate of fries (since she can produce 12 burgers or 12 plates of fries in an hour).
Comparing the opportunity costs, we can see that Martin has a lower opportunity cost for producing burgers (2 plates of fries) compared to Janelle (1 plate of fries). On the other hand, Janelle has a lower opportunity cost for producing plates of fries (1 burger) compared to Martin (2 burgers).
Therefore, if Martin specializes in producing burgers and Janelle specializes in producing plates of fries, they can trade their surplus with each other. Martin can trade his extra burgers with Janelle's extra plates of fries.
By doing so, both Martin and Janelle can benefit from the trade as they can obtain the items they have a higher opportunity cost for, without sacrificing the production of the items they specialize in.
In conclusion, Both Martin and Janelle would benefit from making the deal to specialize and trade.
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(Time for a Lump Sum to Double) How long will it take $200 to double if it earns the following rates? Compounding occurs once a year. Round your answers to two decimal places, a. 8% year(5) b. 11% year(s) c. 19%. year(s) d. 100%. year(5)
The time it takes for $200 to double at different interest rates is approximately:
a. 8%: 9.01 years
b. 11%: 6.34 years
c. 19%: 3.79 years
d. 100%: 1.59 years
To calculate the time it takes for a lump sum to double, we can use the formula for compound interest:
Future Value = Present Value * (1 + Interest Rate)^Time
Given:
Present Value (P) = $200
Future Value (FV) = $200 * 2 = $400
We need to solve for Time (T) in each case.
a. For an 8% interest rate:
$400 = $200 * (1 + 0.08)^T
Taking the logarithm of both sides:
log($400) = log($200 * (1 + 0.08)^T)
log($400) = log($200) + log(1.08^T)
log($400) = log($200) + T * log(1.08)
T = (log($400) - log($200)) / log(1.08)
Using a calculator, T ≈ 9.01 years
b. For an 11% interest rate:
$400 = $200 * (1 + 0.11)^T
Taking the logarithm of both sides:
log($400) = log($200 * (1 + 0.11)^T)
log($400) = log($200) + log(1.11^T)
log($400) = log($200) + T * log(1.11)
T = (log($400) - log($200)) / log(1.11)
Using a calculator, T ≈ 6.34 years
c. For a 19% interest rate:
$400 = $200 * (1 + 0.19)^T
Taking the logarithm of both sides:
log($400) = log($200 * (1 + 0.19)^T)
log($400) = log($200) + log(1.19^T)
log($400) = log($200) + T * log(1.19)
T = (log($400) - log($200)) / log(1.19)
Using a calculator, T ≈ 3.79 years
d. For a 100% interest rate:
$400 = $200 * (1 + 1)^T
$400 = $200 * 2^T
Taking the logarithm of both sides:
log($400) = log($200 * 2^T)
log($400) = log($200) + log(2^T)
log($400) = log($200) + T * log(2)
T = (log($400) - log($200)) / log(2)
Using a calculator, T ≈ 1.59 years
Therefore, the time it takes for $200 to double at different interest rates is approximately:
a. 8%: 9.01 years
b. 11%: 6.34 years
c. 19%: 3.79 years
d. 100%: 1.59 years
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The summarised statement of financial position of D plc. at 30 June 20X9 was as follows: K’000 K’000 Fixed assets 15,350 Current assets 5,900 Current liabilities (2,600) Net current assets 3,300 9% debentures (8,000) 10,650 Ordinary share capital (25 ngwee shares) 2,000 7% preference shares (K1 shares) 1,000 Share premium account 1,100 Retained profit 6,550 10,650 The current price of the ordinary shares is K1.35 ex dividend. The dividend of 10 ngwee is payable in the next few days. The expected rate of growth of the dividend is 9% per annum. The current price of the preference shares is 77 ngwee and the dividend has recently been paid. The debenture interest has also been paid recently and the debentures are currently trading at K80 per K100 nominal. Assume that D plc. issued the debentures one year ago to finance a new investment. Ignore corporation tax. (a) Calculate the gearing ratio for D plc. using market values (4 Marks) (b) Calculate the cost of ordinary share capital, the cost of preference share capital, and the cost of debentures. (6 Marks) (c) If the capital asset pricing model (CAPM) were to be used to calculate the cost of ordinary share capital for D plc., state the three (3) pieces of data needed. (3 Marks) 3 (d) Calculate the company’s weighted average cost of capital (WACC) using respective market values as weighting factors. (8 Marks) (e) Give any four (4) reasons why D plc may have issued debentures rather than preference shares to raise the required finance.
a) The gearing ratio measures the proportion of a company's capital that is financed by debt. To calculate the gearing ratio using market values, we need to determine the total debt and total equity values.
In this case, the debentures have a market value of K8,000, and the total equity is the sum of ordinary share capital (K2,000), preference share capital (K1,000), share premium account (K1,100), and retained profit (K6,550).
The gearing ratio is calculated as total debt divided by total equity.
b) The cost of capital for each source can be calculated as follows:
Cost of ordinary share capital: The cost of equity is determined using the dividend growth model. The current dividend is 10 ngwee, and the expected growth rate is 9%. The cost of equity is calculated as the dividend divided by the current ex-dividend price.
Cost of preference share capital: The cost of preference shares is the dividend divided by the current price.
Cost of debentures: The cost of debt is calculated by dividing the annual interest payment by the current market value of the debentures.
c) To calculate the cost of ordinary share capital using the capital asset pricing model (CAPM), three pieces of data are needed: the risk-free rate of return, the beta of the stock, and the expected market return.
d) The weighted average cost of capital (WACC) is calculated using the respective market values as weighting factors.
The WACC is the average cost of financing for the company, taking into account the cost of each source of capital weighted by its proportion in the company's capital structure.
It is calculated by multiplying the cost of each source of capital by its market value, summing them up, and dividing by the total market value of the company's capital structure.
e) Reasons why D plc may have issued debentures rather than preference shares to raise finance could include:
Lower cost of debt: Debentures may have lower interest rates compared to preference shares, resulting in lower overall financing costs for the company.
Fixed interest payments: Debentures have fixed interest payments, which provide certainty and stability for the company's cash flow planning.
No dilution of ownership: Issuing debentures does not dilute the ownership of existing shareholders, as they do not confer voting rights or ownership claims on the company.
Access to different investor base: Debentures may attract a different set of investors who prefer fixed-income securities over equity-based investments, expanding the company's investor base and diversifying its sources of funding.
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The National Audit Department is an independent body entrusted to carry out auditing. Auditing carried out by the National Audit Department includes Financial Statement Auditing, Compliance Auditing and Performance Auditing. These three types of auditing need to be implemented taking into account the code of ethics of public sector auditors.
Officer A has been placed in the Financial Audit Sector who is responsible for performing two types of auditing, namely Financial Statement auditing and Compliance auditing. Officer A is a friendly and approachable person. His friendly nature makes him easy to make friends with anyone and is also liked by the audit team. The audit party is a Federal Statutory Body XYZ which has subsidiaries to manage hotel chains in Malaysia. Officer A always receives accommodation vouchers in the hotel chain of the Federal Statutory Body's subsidiary. Officer A will use the voucher to take the family on holiday. In addition, officer A will also receive special treatment at the hotel chain when he informs Auditi that he will be staying at their hotel chain. Special treatment includes free dinner for the first night of stay.
During the audit of the Financial Statements, officer A found that Federal Statutory Body XYZ did not comply with accounting standards which resulted in the financial assets of Federal Statutory Body XYZ being overstated. Officer A raised this matter during the meeting to discuss the findings of the Audit. Officer A has also included this matter in the issued Audit Certificate.
Officer A, responsible for Financial Statement and Compliance auditing at the National Audit Department, discovered non-compliance with accounting standards during the audit of Federal Statutory Body XYZ's Financial Statements.
Officer A's role in the Financial Audit Sector involves conducting Financial Statement and Compliance auditing. While Officer A's friendly and approachable nature helps establish rapport with the audit team, it is essential to uphold professional ethics and integrity in carrying out the audits. During the audit of Federal Statutory Body XYZ's Financial Statements, Officer A identified non-compliance with accounting standards, leading to an overstatement of financial assets.
In a responsible and ethical approach, Officer A raised this matter during the meeting to discuss the audit findings, ensuring transparency and accountability. By including this issue in the issued Audit Certificate, Officer A demonstrates a commitment to reporting accurate and reliable information. Despite personal benefits received, such as accommodation vouchers and special treatment at the hotel chain owned by the Federal Statutory Body's subsidiary, Officer A remains impartial and focuses on the audit's objective of ensuring compliance and accuracy in financial reporting.
By adhering to the code of ethics for public sector auditors, Officer A maintains professional integrity and contributes to the credibility of the audit process, ultimately serving the public interest and promoting good governance.
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The Tightwad bank offers an amortized loan with a unique feature. At the end of the loan amortization period, the bank pays the borrower an amount equal to the original loan principal. Assume that the amortization period is 30 years, that payments are monthly, and that the annual interest rate is 3.6%. If the principal is $400,000 then what are the monthly payments on the loan? O a. $2,437.16 b. $2,322.84 Oc. $2,122.84 Od. $2,222.84 O e. $2,422.84
The monthly payment on the loan can be calculated using the amortization formula, which takes into account the loan principal, the interest rate, and the loan term.
For this scenario, the principal is $400,000, the annual interest rate is 3.6% (or 0.036 as a decimal), and the loan term is 30 years (or 360 months). Using the formula for calculating the monthly payment on an amortized loan, we can plug in the given values:
Monthly Payment = (Principal * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Total Number of Payments))
Monthly Interest Rate = Annual Interest Rate / 12
Plugging in the values:
Monthly Interest Rate = 0.036 / 12 = 0.003
Total Number of Payments = Loan Term * 12 = 30 * 12 = 360
Monthly Payment = ($400,000 * 0.003) / (1 - (1 + 0.003)^(-360))
Calculating the above expression will give us the monthly payment amount.
The correct answer is (b) $2,322.84.
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Sinek refers to "The Abstraction Challenge" in his book. What is meant by this? Is this a challenge in your organization? Give examples. What can you do to help fight The Abstraction Challenge in your organization?
In Simon Sinek's book, "The Abstraction Challenge" refers to the difficulty faced in effectively communicating ideas or concepts that are abstract or complex in nature.
For instance, in a tech company, the challenge could be explaining intricate technical concepts to non-technical stakeholders or potential customers. This requires bridging the gap between complex jargon and accessible language, highlighting the tangible benefits and practical applications.
To fight the abstraction challenge, organizations can take several steps. Firstly, they can invest in effective communication training for employees, enabling them to convey abstract ideas in a clear and relatable manner. This may involve using analogies, storytelling, or visual aids to simplify complex concepts.
Additionally, creating a culture of transparency and open dialogue can help address the challenge. Encouraging questions and feedback allows for clarification and ensures everyone understands the abstract ideas being discussed.
Furthermore, organizations can leverage various communication channels, such as presentations, workshops, and documentation, to reinforce understanding and engage stakeholders. Using real-world examples and case studies can help contextualize abstract concepts, making them more tangible and relatable.
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Describe a current startup concept.
Use a recent news article about a startup
Select one of the growth engines from the reading and describe how it can be used to grow the startup. Explain why that growth engine is a good fit. Give specific implementation ideas to make the growth happen.
Current startup concept: A food delivery platform that focuses on delivering fresh and locally sourced ingredients to customers, enabling them to cook delicious and healthy meals at home.
This startup aims to address the increasing demand for convenient and healthy meal options by providing a platform that connects customers with local farmers and suppliers. Through an online marketplace, customers can browse and select their desired ingredients, which are then delivered to their doorstep. The platform will emphasize sustainability by promoting seasonal produce and reducing food waste.
To leverage the growth engine of platform innovation, the startup can introduce features such as personalized recipe recommendations based on customers' preferences and dietary restrictions. By utilizing data analytics and machine learning algorithms, the platform can analyze customer behavior and provide tailored suggestions. Additionally, implementing a loyalty program that rewards customers for their continued engagement and referrals can help drive user acquisition and retention.
Furthermore, the startup can leverage network effects by partnering with popular chefs and influencers to create exclusive recipes and cooking tutorials. Collaborating with local restaurants to offer meal kits featuring their signature dishes can also attract a wider customer base. By fostering a strong community through user-generated content and social media engagement, the startup can encourage organic growth and word-of-mouth marketing.
By incorporating these strategies, the startup can capitalize on the growth engine of platform innovation and network effects, establishing itself as a go-to platform for convenient, sustainable, and delicious meal solutions.
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) Explain what efficient-market hypothesis (EMH) say about (a) securities prices, (b) their reaction to new information, and (c) investor opportunities to profit? What is the behavioral finance challenge to this hypothesis? (10 marks) (b) HJK company paid a dividend of $1.00 at the end of this year. Thereafter, the dividends are expected to grow at the rate of 25% per year for 2 years, and then drop to 18% for 1 year, before settling at the industry average growth rate of 10% indefinitely. If you require a return of 16% to invest in a stock of this risk level, how much would you be justified in paying for this stock? (10 marks)
The amount the investor would be justified in paying for this stock is $11.55.
(a) Securities prices: The efficient-market hypothesis (EMH) suggests that the market has priced securities correctly and fairly. Prices, therefore, reflect all information, including financial information, and any other data that may impact price or trading.
Therefore, it is difficult to predict security prices, as they are always moving on the basis of new information and changes in demand or supply for the security in question.
(b) Reaction to new information: According to the efficient-market hypothesis, new information is priced in almost immediately and completely in an efficient market. When new information becomes available, prices adjust to reflect the new data, making it impossible to profit from it in the future.
(c) Investor opportunities to profit: Efficient market hypotheses suggest that investors can not get the opportunity to profit in the market without taking on more risk than their return warrants.
All securities are appropriately priced, and so it is not possible to outperform the market unless there is additional risk or some other factor that would cause a higher return than what is expected.
Behavioral finance challenges to EMH: One of the most significant challenges to the efficient market hypothesis is behavioral finance. Behavioral finance is based on the theory that investors act on emotion and irrationality instead of logic and data.
To invest in a stock of this risk level, if an investor requires a return of 16%, the amount the investor would be justified in paying for this stock is $12.55.The formula used to calculate the value of the stock is given below:P3 = D3(1+g3)/(r-g3)
Where:P3 = the expected price of the stock at the end of year 3
D3 = the dividend payment at the end of year 3g
3 = the expected growth rate of the dividen
dr = the required rate of return
The calculation of the expected price of the stock at the end of year 3 is as follows:
D3 = $1 × (1 + 0.25) × (1 + 0.25)
= $2.81
The expected growth rate of the dividend in the third year is 18%, and the required rate of return is 16%.
Therefore,P3 = $2.81 × (1 + 0.18) / (0.16 - 0.18)
= $1.55 / -0.02
= -$77.50
To get the expected price of the stock at the end of year 2,
we use the formula:
P2 = D2(1+g2)/(r-g2)
P2 = $2.81 × (1 + 0.25) / (0.16 - 0.25)
P2 = $3.52
The expected price of the stock at the end of year 1 is calculated using the formula:
P1 = D1(1+g1)/(r-g1)
P1 = $1 × (1 + 0.25) / (0.16 - 0.25)
P1 = $2.50
The justified price of the stock at present is calculated using the formula:
P0 = D1/(1+r) + P1/(1+r) + P2/(1+r) + P3/(1+r)
P0 = $1/(1+0.16) + $2.50/(1+0.16) + $3.52/(1+0.16) + $12.55/(1+0.16)^3
P0 = $0.86 + $2.16 + $2.53 + $6.00
P0 = $11.55
Therefore, this stock is $11.55.
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